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A new plan by California lawmakers to help fund the state’s struggling journalism organizations could advance in the coming days but faces an uncertain future.

Assembly Bill 2222 would create refundable tax credits for California local news organizations based on the number of journalists they employ, which in practice would provide direct cash infusions to participating newsrooms.

The bill, introduced by Assemblymember Christopher M. Ward (D-San Diego) earlier this year, is the latest effort to provide a lifeline for the news industry. There has been much talk both in California and globally about government support for journalism. But this is potentially the largest relief plan to date, with the state tax board estimating it would make more than $40 million available to newsrooms annually. The bill passed the Assembly and needs approval from the Senate to reach the governor’s desk.

Publishers, journalists and their unions have long argued that online search and social media platforms are harming the journalism business by eating up advertising revenue while publishing content they don’t pay for.

Previous attempts by California lawmakers focused on forcing Google, Meta and other platforms to pay their share, but this proposal has a unique solution to funding the program.

Ward described the bill as an important step in keeping a strong press corps in California, which he said is more important than ever in an era of digital misinformation.

Ward said the bill would “strengthen democracy” and “keep the lights on” in newsrooms. He cited President Trump’s own attacks on the press. “We thought, ‘What more can California do to help support them?’” he said.

Trump’s efforts to strip public radio and television stations of federal funds and the steep downward profit-losing trend for commercial newsrooms has meant, Ward said, that newsrooms have severely scaled back operations. Rural areas in particular have altogether lost their news sources, with many forced to shut down.

The amount of advertising to local newspapers declined by 82% — a $40 billion drop — since 2000, Pew Research Center said in 2023. And almost 40% of all local U.S. newspapers have vanished, according to an annual report on the state of local news put out by Northwestern University’s Medill journalism school.

A report last year by data firm Muck Rack and Rebuild Local News, a nonprofit advocating for government help for the journalism sector that is sponsoring AB 2222, estimates there has been a 75% decline in the number of local journalists per 100,000 of population in the U.S. since 2002.

The law, if approved, would work by assigning a “job retention credit” of $20,000 per journalist for up to five positions, and after that $15,000 for every additional journalist. Part-time positions would be awarded half-credits. It also stacks an additional $15,000 credit for each new hire, to incentivize expanding journalist headcounts.

To pay for the credits, the bill would amend California’s tax code to align with a little-discussed component of Trump’s “Big Beautiful” tax bill that expanded taxes on some companies by eliminating a deduction for executive salaries of over $1 million annually.

It is common practice for the state to consider aligning its tax code with the federal structure to make filing taxes easier and administering them more cheaply. But California has not yet sought to adopt this federal tax expansion.

As a tax measure, AB 2222 requires approval from a supermajority two-thirds of the Legislature, no easy task in an election year and with a fast-approaching deadline for lawmakers to approve bills Monday, which marks the end of this year’s legislative session.

The California Taxpayers Assn. and groups representing business interests such as the California Chamber of Commerce oppose the bill because it raises taxes on employers that they argue already face billions of dollars in new taxes. They contend that the higher costs will be passed along to consumers, and they also take issue with funneling a new funding source to a niche industry without going through the budget process.

“Financing an industry-specific tax credit with a tax increase on an unrelated group of taxpayers is an unsound way to budget,” the taxpayers association wrote in its letter of opposition.

Republican lawmaker Carl DeMaio of San Diego has vocalized his opposition in discussions of the bill, criticizing the idea of providing funding to outlets that make political endorsements. DeMaio did not provide a response to a request for comment about his current position on the proposal.

The bill’s backers are hopeful it will wriggle through this legislative session and land on the governor’s desk.

Yet they are not sure whether Newsom will sign it. In the past, Newsom has been reluctant to greenlight laws that tinker with the state budget after those fiscal discussions conclude in the first half of the calendar year.

The governor’s finance office issued an analysis opposing the bill for not including a cap on the tax credits, thus creating “unlimited fiscal liability to the state,” and argued the bill mainly subsidizes existing activity rather than encouraging the creation of new jobs.

An analysis by the state’s Franchise Tax Board — the agency that levies personal and corporate income taxes — found that the funding stream would bring $29 million in new revenue to the state’s general fund in the 2026-27 year and $58 million the following year.

Meanwhile, the estimated amount of the tax credit for local news organizations would be $19 million the first year and $43 million the second year. After accounting for the tax credits as well as the administrative costs, the budget would still see a net increase of $10 million and $15 million in those years.

“It’s fully paid for,” said former state senator Steven Glazer, who is a passionate proponent of the bill. Glazer during his Senate term pushed similar legislation that was ultimately shelved in a deal with tech giants.

In recent years California lawmakers have also weighed tax credits for Hollywood jobs. In June, lawmakers approved a major expansion of the funding allocated each year to the state’s film and television tax credit program, moving to raise that cap to $750 million from $330 million. The legislature is also considering a bill that would provide some $100 million in annual funding to post-production work.

The newsroom bill is designed specifically so as to be as neutral as possible on the medium — whether print newspapers, digital news sites, ethnic media or television broadcasters — as well as the business model of the newsroom — whether for-profit, nonprofit or publicly subsidized. The point is to prevent the government from having strong influence or being able to pick winners and losers in the industry, said Matt Pearce, a director of policy for bill sponsor Rebuild Local News, which successfully backed similar legislation in Illinois.

“You have practically the whole range of the local news world represented in some form. Big, little, independent,” Pearce said.

Pearce formerly worked as a reporter at The Times, and served as president of Media Guild of the West, the union that represents Times journalists.

The bill is also supported by the California News Publishers Assn., of which the Los Angeles Times is a member.

SACRAMENTO — Gov. Gavin Newsom on Monday signed his final state budget as governor, a $351.7-billion spending plan that seeks to uplift the poorest Californians through a tax system reliant on the stock market gains of the wealthy.

In a video message, Newsom extolled free school meals, universal transitional kindergarten, 130,000 subsidized childcare slots and other accomplishments in his tenure at the state Capitol, a period in state history marked by a dramatic expansion of state government and over $100 billion in increased spending.

“Over the past eight years, we built great things for the people of California — some of the boldest actions any government in this country has taken in a generation,” Newsom said. “And we did this without breaking the bank. We did this by design.”

The agreement ends weeks of lobbying by outside interests and negotiations among lawmakers and the governor at the state Capitol about how to handle a surge of income tax collected on stock market gains related to artificial intelligence.

Economists have warned that the revenue bump is potentially temporary and analysts say the growth in state spending could leave California in a challenging position if the economy declines.

Assemblymember David Tangipa (R-Fresno) agreed with Democrats that the budget is “compassionate.”

“My fear is that it’s not too much of a competent budget, and the budget continues a pattern that Californians know all too well: Spend now, justify it later, and hope somebody else pays the bill,” he said during a floor debate Monday.

Here’s what you need to know about the spending plan, which takes effect July 1.

Who decides the state budget?

The simplest answer is: Democrats. California voters have elected Democrats to represent 30 of the 40 seats in the Senate and 60 seats of the 80 seats in the Assembly. The budget was passed through a majority vote in each house of the Legislature and signed by Gov. Gavin Newsom, also a Democrat.

A more complex answer is that the budget is a product of dozens of legislative hearings, millions of dollars spent on lobbying by outside interests, talks among lawmakers and the governor and ultimately subject to the same political dynamics that rule the Democratic party.

Senate President Pro Tem Monique Limón (D-Goleta) and Assembly Speaker Robert Rivas (D-Hollister), in consultation with the chairs of the budget committees, represent their Democratic caucuses and reach a final agreement on the details of the spending plan with Newsom. In reality, staff members for the three parties handle most, if not all, of the back of forth negotiations to get there.

Union leaders seeking better pay, working conditions, benefits for workers and opportunities to expand their ranks are often brought in to consult or hammer out thorny deals as business groups try to fight off more regulations, taxes and costs, and support policies that increase their financial performance.

Democrats are spending more than ever before. How is that possible?

The Legislative Analyst’s Office, the nonpartisan fiscal advisor for lawmakers, recently examined the increase in state spending since 2019-20, Newsom’s first full year in office.

Between the budget approved that year and the spending proposal Newsom unveiled in January, spending from the state’s main operating fund had grown by over $100 billion, or 70%. That was largely by a 60% increase in revenue during that time. California typically operates with a spending deficit because Democrats spend more money than the state brings in.

The LAO found that the increase in spending stemmed from the growing cost of sustaining programs and services that were already in place when Newsom took office. About 30% of the remaining spending growth was categorized as new, either by newly created programs or the expansion of existing services.

Among the report’s conclusions: California could not afford the programs that predated Newsom and the ones he and the Legislature adopted.

To balance the budget over the last few years, Newsom and lawmakers have dipped into the state’s reserves at a time when California is experiencing strong revenue growth, which the LAO has cautioned against. Democrats have also increased taxes on businesses, paid for programs out of other funds and suspended reserve deposits among other solutions.

This year, the state budget places $6.4 billion in higher than expected revenue into a temporary holding account to knock down a deficit and balance the budget through 2027-28.

Democrats are pursuing a change to the state constitution on the November ballot that would allow them to set aside more money in years of good revenue growth to prevent cuts in future downturns.

Where is the money going?

Education and Medi-Cal are the two largest costs for the state.

Medi-Cal is the state’s version of subsidized health insurance for low-income Californians and provides medical, dental and vision care for an estimated 14.5 million people, or about one-third of the state population.

The federal government pays for more than half of the cost of the program. California is expected to spend about $50 billion from the general fund next year out of a total estimated at more than $220 billion in costs shared between the state and federal government, according to the LAO. State taxes and fees on providers also help fund Medi-Cal.

Overall, Medi-Cal costs more than any other state program and takes up about 40% of total spending, including federal funds the state receives, according to the LAO.

Spending on Medi-Cal has more than doubled over the last 10 years, which the LAO attributes to an increase in costs per enrollee, more enrollees and a greater share of seniors seeking care, among other factors.

Under Newsom, California has expanded Medi-Cal, including offering coverage to include all immigrants regardless of their immigration status, which the governor said has dropped the state’s uninsured rate down to 5.9%

The cost of Medi-Cal has grown beyond what Democrats expected and resulted in Newsom suggesting spending cuts.

The final budget agreement rejects a call by Newsom to lower the asset limit to $2,000 now and instead lowers it to $21,000 in 2027-28 to be eligible for Medi-Cal. The Legislature also delayed the governor’s proposal to reduce dental coverage and shift asylum seekers and other immigrants to restricted scope Medi-Cal, according to Jason Sisney, the lead budget advisor for the Assembly who posts about the budget on Substack.

The budget includes Newsom’s proposal to shift enrollees with unsatisfactory immigration status, a term that includes undocumented immigrants and others, from managed care to fee-for-service to save costs.

Under Proposition 98, approved by voters in 1988, California has a minimum funding guarantee for schools and community colleges and dedicates roughly 40% of general fund revenue to education.

Sisney said the budget increases the Local Control Funding Formula by $2.2 billion and provides historic general fund per pupil spending of $21,148. Support for special education also grew by $1.8 billion.

The California Community Schools Partnership Program received a $1-billion boost and Democrats directed $2.8 million in additional funding to the program that provides free meals for school children.

The budget also establishes 22,770 new slots for free or reduced childcare, which Newsom had proposed decreasing.