Study: News deserts cost taxpayers $1.1B per year

A new report out Wednesday afternoon from Rebuild Local News estimates the decline of local journalism is costing local governments and taxpayers approximately $1.1 billion a year nationwide.

Why? Because when communities lose local news coverage, investors perceive greater risk of government waste, inefficiency and corruption. They consequently charge higher interest for bonds and other financing for schools, roads, water systems and other public infrastructure.

The analysis builds on a landmark 2020 study (“Financing Dies In Darkness? The Impact of Newspaper Closures on Public Finance,” Journal of Financial Economics) that found municipal borrowing costs rose 5 to 11 points after newspaper closures.

The new report estimates one-fifth of Americans now live in counties without a local newspaper. Applying an average borrowing-cost hike of 8.6, the authors calculate an additional $1.1 billion in annual costs, equal to roughly $38 per household in news deserts. Minnesota incurs approximately $13 million in additional annual borrowing costs, or about $11 per household each year, the study found.

The report's central message is that local journalism provides concrete economic value. The authors conclude that efforts to rebuild local journalism should focus not only on news deserts but also on communities where newsroom staffing has been significantly reduced. Read the report here.