• by Ray Schultz , Columnist, May 19, 2025

An anticipated $30 million payout to support California newsrooms will be slashed by $20 million during the state’s 2025-26 fiscal year.  

Facing a $12 billion increase in California’s anticipated budget shortfall, Gov. Gavin Newsom announced the 67% reduction for newsrooms, along with cuts in healthcare for undocumented immigrants and overtime hours for some government workers, last week. 

The $20 million cut may not seem large compared to the billions being bandied about, but it reflects the fiscal pressures facing the news industry in the state. 

Last August, California reached an agreement with Google that would provide funding to newsrooms and create an AI accelerator while avoiding a legal showdown with Google and other firms.

This resulted in creation of the News Transformation Fund, through which Google was to pay $55 million over five years, starting with $15 million in the first year, and the state was to provide $30 million in the first year and $10 million per annum over the next four years. 

Cutting the state payment by two-thirds "moves California in the wrong direction at a time when local journalism is collapsing across the state," says Steven Waldman, president of Rebuild Local News, according to the Los Angeles Times. "We urge the Legislature to hold an open, transparent hearing to assess the impact of this shortfall and explore ways to ensure funding matches the scale of the crisis."

The News Transformation Fund was to fund newsrooms based on their employment levels. 

It’s not clear if Google will impose a similar cut. But on the state side, a positive plan has been gutted for now.