Newspaper publishers seek tax cut

OLYMPIA — Newspaper publishers implored lawmakers on Wednesday to give them a temporary break on the state's main business tax, saying that some of the state's papers are "holding on by our fingertips."

Seattle Times publisher Frank Blethen and Scott Campbell, publisher of The Columbian in Vancouver, told the Senate Ways and Means Committee they need help during tumultuous times in the industry.

Under the proposed measure, the business and occupation tax on newspapers would be cut by 40 percent through 2015.

Blethen said a state tax break wouldn't fix all that ails newspapers, but it would help them preserve jobs.

The loss of advertising revenue, mixed with the current economic climate, has put weekly and daily newspapers in the state under "tremendous financial pressure," he said.

"Some of us, like The Seattle Times, are literally holding on by our fingertips today," Blethen said.

Newspapers across the state have resorted to buyouts and freezes on pensions and retirement plan contributions to stem the financial free-fall.

The Seattle Times, owned by the Blethen family with a 49.5 percent stake held by McClatchy Co., has cut nearly 500 positions in the past year, and 500 managers and nonunion employees have been ordered to take a week off without pay by the end of this month. Earlier this month, the paper announced it was asking all of its unions to contribute savings equivalent to 12 percent of pay and benefit expenses.

"The critical challenge that's facing us right now is how do we preserve content, which also has been cut severely, and how do we preserve jobs," Blethen said.

Campbell told lawmakers that his newspaper had three rounds of layoffs last year, and that his staff has dropped from 360 people to about 290. After the hearing, he said the newspaper pays about $140,000 a year in business and occupation tax, and that a 40 percent cut would be significant.

"As leaders of our companies, we have had to really buckle down and figure out how to weave through this economic time," Campbell said.

Newspapers even face being shuttered.

The Hearst Corp. announced Jan. 9 that it was putting the Seattle Post-Intelligencer up for sale, and that if no buyer was found within 60 days, the paper would be shut down or converted to an Internet-only publication with a skeleton staff. Hearst still has not yet made a decision on whether to keep the P-I as an online publication.

The Pacific Northwest Newspaper Guild has scheduled a meeting next Tuesday to discuss whether P-I workers are interested in investigating a possible employee buyout of the newspaper.

Rowland Thompson, executive director for Allied Daily Newspapers of Washington, said newspapers are asking for the same tax rate that the aerospace and timber industries currently have.

He noted a decline in the number of statehouse reporters over the past few years.

"That's something we're desperately trying to stem the tide of, to keep those newsrooms vibrant and alive," he said.

Senate Ways and Means Chairwoman Margarita Prentice, D-Renton, said the financial downturn for newspapers is troubling, and that it might be time for the Legislature to offer some help.

"We need to have that investigative journalism," she said. "Society can't afford to be without it."

The committee heard testimony on two bills sponsored by Prentice: one that relates solely to newspapers and another that would also reduce the tax for businesses that publish magazines and periodicals, and for printers. Both measures have bipartisan support.

The one addressing just newspapers would cost the state $2.1 million through 2011. Through 2015, when the reduction would end, it would cost a total of $8.1 million.

The measure that would cover newspapers, plus magazines and periodicals would cost double that amount over the next seven years, or $16 million.

Blethen said he understands that lawmakers may wonder why newspapers should get tax relief when other businesses are hurting.

"The answer is the unique role of newspapers," he said. "The unique role that they play in society and the unique role that they play in our self-government and the unique role they play in binding and creating community."

A committee vote on the measures could come as early as Thursday.

The tax break bill for newspapers is Senate Bill 5942. The tax break that includes magazines and periodicals is Senate Bill 5962.