Did you know that government borrowing costs increase in the long run after a newspaper closure?
While local media in Louisville remains strong, America’s newspapers at the state and local level are collapsing across the country. That’s a great loss to democracy, but it also comes at a monetary cost for the city, according to the report “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance.”
Towns and cities borrow money, just as you borrow money from a bank to buy a house, to fund police stations, construction, etc. Taxpayers pay off these loans over time, just as homeowners pay off their mortgages.
When a bank realizes that a loan is riskier — one of the results of not having local newspapers around anymore to hold government officials accountable — the borrowing costs increases.
Let’s say a local government gets a loan for $65 million. If the bank sees risk, the borrowing cost for governments increases by about 0.1 percent. If the cost of a loan goes up by 0.1, in the case of that $65 million loan, that’s about $65,000 more that taxpayers have to pay every year.
Louisville is extremely lucky — local media is saving our city thousands of dollars. It’s vital that local news remains vibrant.
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