As federal and state legislators consider taxing AI companies and/or data centers, they point to numerous potential harms that need to be “mitigated”:
With such an already-impressive list of possible downsides, it may seem small-minded to add one more: the degradation of local news and information.
The decimation of local news business models could be catastrophic for communities. The local news system is already anemic, and AI will make it much worse.
How does AI harm local news? In an amicus brief that Rebuild Local News, where I’m chair, and other local news groups filed in The New York Times lawsuit against Microsoft, we argued that the already fragile local news system could be devastated even further by AI, even though, ironically, journalism is providing great value to the AI companies:
“AI companies scrape journalism from local news websites, mostly without compensation, both to pretrain their models and to supply up-to-date answers through retrieval-augmented generation (RAG),” we explained in our amicus brief. “The chatbots used by AI companies aspire to provide complete answers, obviating the need for a reader to visit the websites that financially invested in creating the underlying journalism.”
Part of the problem is the death of the “click-through.” The Medill School of Journalism’s 2026 State of Local News Report found that the web traffic of the top 100 newspapers has declined nearly 50 percent since OpenAI released ChatGPT in 2022: “As more web services, including traditional search engines, move toward the ‘answer machine’ model of AI chatbots, audiences are increasingly presented with summaries of local news content and have less incentive to actually visit the news sites,” the report stated. A Chartbeat study found the decline was steepest for smaller publishers (60 percent for small publishers versus 22 percent for larger publishers).
Second, when consumers can get news outlets’ information for free through AI, they’re less likely to subscribe or become paying members. Why pay or donate if you can get the information (from an AI chatbot) for free?
Third, AI usually makes the creators of journalism invisible. As we wrote, “Local news, whether it is commercial or nonprofit, can only succeed if it provides important information and if residents are aware of the source of that information . . . This matters especially in the case of nonprofit local news organizations, which need to convince local residents or foundations that the news organizations are doing important work with significant impact.”
You may have already heard about what happens to communities without local news. But in case you haven’t, here’s a quick summary of what the academic research shows:
What’s more, AI could exacerbate local misinformation. Already, it has an accuracy problem regarding current events. A NewsGuard study found that in 2025, the largest AI tools repeated misinformation about 35 percent of the time. And they’re likely to be worse with local news because the bots struggle when information is scarce. Finally, areas with few journalists will be ineffective at watchdogging scurrilous deepfake creations, especially in the days before an election.
More positively, strengthening local news often leads to reduced corruption, less government waste, more responsive elected officials, less misinformation, and maybe even less divided communities.
Unfortunately, given the proliferation of AI, potential investors in local news have little financial incentive to do so. No investor would back outlets that spend money to create journalism for which they earn little, while others extract more of the economic value.
Philanthropists considering donating to the growing number of nonprofit news outlets also face a cruel dilemma. Donors and foundations have been quite generous in confronting this local news crisis; and while charitable support has not filled all the gaps, a thousand flowers of innovation have bloomed. “Now,” our amicus brief observed, “many of those gains could be wiped out—and the philanthropic sector would confront an uncomfortable reality: they are devoting their precious dollars to remediate harms caused by the AI companies’ unwillingness to compensate news organizations. Philanthropy will, in effect, be subsidizing the AI companies.”
State legislators and members of Congress will be considering a wide range of taxes on AI in the coming months and years. Some proposals would tax the power consumed; some tax the scraping; some tax computer power used. Their legislative goals are usually the same: fix some of the damage that will be caused while AI does ever more wonderful things. The ideas vary, but most would bring in many billions of dollars, so an effort to support, say, 25,000 local journalists would cost only a tiny percentage of the mitigation-revenue haul. (The last federal version of a local journalism employment credit cost $350 million per year.)
California just passed an excellent law that provides refundable tax credits to news outlets that hire and retain local journalists. AI taxes could pay for that nationally or in more states.
Arguing that AI companies should help revive local news doesn’t mean that advocates of such a policy believe AI is inevitably bad for journalism. Indeed, I’m convinced that, used responsibly, AI can help short-staffed newsrooms better serve their communities. Really. It’s just that, to do so, we’ll need, well, flesh-and-blood journalists.
Policymakers routinely allow for projects or industries to grow while requiring them to help pay for collateral damage. For instance, local officials often require developers of a new housing complex to pay for road widening or enhanced sewage systems.
To be clear, I’m not advocating that local news should take priority over electricity prices or other local problems that need fixing when data centers come to town. It’s just that journalism should definitely be on the list of important civic services to be protected both because it’s crucial to a community’s well-being—and can help shine a light on those other issues—and because it is just: AI companies directly benefit from the journalism we paid to create, and leave local news business models worse off.
Indeed, when it comes to data centers, ensuring a sufficient number of journalists could actually help communities get lower electricity prices, water preservation, and other goals.
Communities that decide to allow data centers—but with better protections—should create a system to fund journalists who provide accountability and transparency.
Americans were furious that these data centers were being imposed on them, and that the plans and information were secretive. Research at Rebuild Local News found that proposed and under-construction data centers are disproportionately located in counties with very few local journalists.
This could be accomplished by requiring them to set aside funds to create an endowment to pay a local reporter, or reporters, to cover the data center. This would be a lump-sum payment to a community foundation that would subsidize journalism so that AI companies wouldn’t influence coverage.
AI poses an existential threat to community news. But if they share some of their gains, AI could turn those analog lemons into lemonade tokens. More local journalists would mean better local information, which will, in turn, make AI answers more useful and more accurate. AI could help revive community news and help their own bottom line at the same time.
Or, as Claude, ChatGPT, and other AI tools might chirp, “This is an excellent idea!”
The post AI: How to Preserve Water, Lower Utility Rates—and Save Local News appeared first on Washington Monthly.
