A Canadian program to place local reporters in underserved communities has lived from renewal to renewal. Publishers who relied on the Local Journalism Initiative couldn’t be sure whether the money would be there again.
That changed last week when Canada proposed a federal budget that would make the Local Journalism Initiative permanent. The 2026 budget would increase LJI funding to $134 million over four years with $41 million in annual ongoing funding after that. (Figures are, naturally, in Canadian dollars.) For the budget to be finalized, it must pass Parliament. With Prime Minister Mark Carney’s party in the majority, it’s expected to.
Expanding the LJI is not even the biggest piece of federal help for newsrooms, according to Paul Deegan, president and CEO of the news industry advocacy group News Media Canada. The same budget extends a 35% tax credit on newsroom salaries through 2028 and opens it to radio and television newsrooms for the first time. The tax credit will cost $501 million over the next five years, according to the budget. Thanks to the Online News Act, Canadian newsrooms also get funding from Google. And then there’s Canadian investment in public media; the 2026 budget added $300 million over two years to CBC/Radio-Canada “to strengthen its capacity to meet the evolving needs of Canadians across the country.”
I asked Deegan: How did Canadian publishers secure so much federal funding for news?
“We have a government that ‘gets it,’” Deegan said. “They see what Big Tech monopolists have done to local news. They know the labor tax credit is the leading driver of maintaining and growing newsroom headcount.”
There have been similar proposals and experiments in the United States, including a new tax credit in California. But Canada is much further down the road. The country can offer lessons on what it looks like when a federal government commits to supporting journalism.
“The tax credit is the big one”
The labor tax credit refunds 35% of a newsroom employee’s salary, up to $29,750 per journalist per year. The percentage had been scheduled to fall to 25% at the end of 2026.
“In terms of employing the [largest] number of journalists and keeping newsroom employment stability, the labor tax credit is number one,” Deegan said.
There’s also the Online News Act which has brought in $100 million of Google money annually. Of that amount, $63 million is set aside for news publishers. (Meta blocked news on Facebook and Instagram in Canada rather than pay under the Online News Act.) Publishers receive around $17,000 per journalist per year.
“That’s about $47,000 per journalist per year from those two measures,” Deegan said. “That just makes a massive, massive difference.”
In the U.S., some ideas for funding local journalism have been criticized as helping large chain newspapers — including chains that have hollowed out local newsrooms for years. Deegan — whose news industry group counts Postmedia and Torstar as members — acknowledged that the largest share of tax credit dollars goes to the largest employers.
But News Media Canada also represents small and digital-only publications, and Deegan noted the smallest Canadian outlets face another problem. To qualify for the tax credit, an organization must produce original news content and regularly employ at least two journalists “at arm’s length” from its owners. An advisory board found the second rule excludes small “mom-and-pop” newsrooms.
Reaching the underserved
The Local Journalism Initiative is a more targeted program than the tax credit. Launched in 2019, it was designed to support local and community news in underserved areas. The LJI program supports about 470 reporting positions in roughly 1,000 communities across Canada.
Even generous government subsidies have not stopped losses in local news completely. But early results showed the LJI increased reporting capacity and local news in “news poverty” communities with limited local news offerings. The same evaluation identified reaching “news deserts” — communities with no existing local news outlets — and Indigenous communities as obstacles.
“Since LJI is demand driven, funding allocation across the country varies and gaps remain in some areas, such as news deserts,” the report reads. Later, the report notes that allowing news startups “could better support attraction and retainment of journalists” in the neediest communities.
Many of the newsrooms receiving the LJI funding are small. Deegan described family-owned weekly newspapers with circulations as low as 800. Funding provides a local journalist to report on “cops, courts, city hall, and the school board.”
“Without those LJI journalists in some of those communities, those things simply wouldn’t be covered,” he said.
Some underserved communities, particularly in northern Canada, struggle to hire reporters given high living costs and remote locations. “Even with the grant, it’s just hard to recruit and find people,” Deegan noted.
How Canada got (and kept) its funding
Deegan points to two factors that have made Canada’s federal funding for news work. The first is distance. Publishers get LJI money from one of three administrator organizations: News Media Canada, Community Radio Fund of Canada, or the Consortium of Official Language Minority Community Media. These organizations — not the government itself — administer the funds and an independent board advises on who qualifies for the tax credit.
“To avoid perceptions of conflict of interest, the government ensured that third parties adjudicate who receives local journalism initiative reporters and who is eligible for the labor tax credit,” Deegan said.
The second factor applies to the Online News Act and, more generally, to Canadian politics.
“When it comes to holding those platforms to account, one of the reasons we have been successful is that we have a ban [on] corporate political financing at the federal level in Canada,” Deegan said. “These companies sprinkle goodies around to friendly academics, think tanks, and other useful idiots to do some of their bidding, but our government sees through that nonsense.”
