Northwest

<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Do you have a news tip? newstips@heraldnet.com | 425.339.3400   Published: Thursday, July 2, 2009 State newspapers get tax break during bad times By Rachel La Corte Associated Press OLYMPIA -- As newspapers across the country struggle through a brutal economic climate, papers in Washington state are getting a tax break. A new law that gives newspaper printers and publishers a 40 percent cut in Washington's main business tax took effect this week, providing some much-needed relief to the business after a year in which The Seattle Post-Intelligencer printed its final edition and other papers suffered drastic cutbacks. "It's not a bailout, because it's not enough money," said House Majority Leader Lynn Kessler, the Democrat who sponsored the measure. "But it is our way of saying to the newspapers that we do believe you're incredibly important to our state and our democracy." The Society of Professional Journalists and the National Conference of State Legislatures was not aware of any other state that has granted a similar tax break to the newspaper industry. In Michigan, a bill that was introduced in May would exempt newspapers from paying that state's main business tax, but the bill has not yet had a hearing. And several states, including Mississippi, Idaho and Colorado, have existing sales-tax exemptions for newspapers. The Washington tax cut, which will cost the state about $1.3 million a year, was approved despite uneasiness in the industry about newspapers relying on the government they cover for help. But there was also a recognition that these are historic times for the industry. Newspapers across the country have resorted to layoffs, pay cuts, furloughs and other cost-cutting moves to deal with a wounded business model and a recession-fueled drop in advertising. The Post-Intelligencer was converted to an Internet-only publication with a much-reduced staff, and The Seattle Times -- the only mainstream daily left in the state's largest city -- has had severe financial troubles of its own and has cut 500 positions in the past year. Gov. Chris Gregoire called the decision to stop printing the 146-year-old P-I a "huge historical loss." Gregoire said that while the tax break won't cure all that ails newspapers, she felt the state needed to do something. "The industry has to right itself, and government can't and won't be a part of it righting itself," she said. "But I don't want government to be part of the reason that this industry can't make it." In May, the company that publishes The Columbian filed for Chapter 11 bankruptcy protection in an effort to resolve credit issues involving a building project. Times Publisher Frank Blethen said things have improved slightly for his newspaper since earlier this year, when he testified in support of the tax break and said that "we're hanging on by our fingertips." "We're probably hanging on by our fingers now," Blethen said. "The tangible result is with all the pressure on budgets and all the red ink right now, anything that helps dampen that means that there's going to be fewer reporters laid off, and less content reduction. It's not big enough to take a lot of pressure off, but it helps." The News Tribune of Tacoma publisher Dave Zeeck said that the approximate $100,000 a year in savings his newspaper will see is the equivalent of keeping two reporters on staff for a year. "We are doing everything we can to preserve news content, and this certainly helps," he said, noting that they are still paying about $150,000 in state business and occupation taxes even after the cut. Washington state's tax cut is to the state's business and occupation tax, which is based on gross revenues instead of profit. Washington is one of just a handful of states that does not have a state income tax. The law provides newspapers the same discounted rate given to the aerospace industry, including Boeing Co., and the timber industry. But media watchers are quick to point out that those other industries have a different relationship with the government than newspapers. "It makes me a little nervous," said Dave Aeikens, president of the Society for Professional Journalists. "There needs to be a clear separation between the government and the watchdog role of the press. If it looks like there's any type of tie, then the public's not going to trust the press." Publishers say that line is not in jeopardy. "We're very good at separating our opinions from our news coverage," said Michael Shepard, publisher of the Yakima Herald-Republic. "We've been doing that for hundreds of years. It wasn't our reporters and editors who were asking for this relief." Rufus Woods, publisher and editor of the family-owned Wenatchee World, said he didn't personally push for the tax cut because he didn't think it was enough to make a difference, and that with the state's current financial troubles, "I didn't think it was a good year to do it." "I don't think it's up to the government to make us survive," he said. "We need to figure out how to make that happen. We're like any other business. We need to find new ways to do things." READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

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