I watched a documentary this week called All the Queen’s Horses. It’s about Rita Crundwell, who was able to embezzle more than $53 million dollars while she was comptroller and treasurer for the small town of Dixon, Illinois between 1983 and 2012. During those years, she stole about $2.5 million per year from the city of about 15,000 people. She concealed her crimes partly by claiming budget shortfalls were due to the state being late in paying the city its share of tax revenue. As a result of her fraud, city departments had to make extreme cuts to public services, and employees went years without raises. Dixon’s police went without essential equipment like radios and few of the town’s streets were repaired.
Dixon had a local paper called the Dixon Evening Telegraph that operated from 1886 until 2008. After 2008, the townsfolk got their news from a large news company covering 24 cities in the region, and Rita Crundwell began embezzling even more money.
Watching the documentary reminded me of a new study I’d seen showing that when local newspapers close, the result is higher costs for taxpayers.
Researchers from the University of Illinois and the University of Notre Dame, who led the study, explained that this happens because one of the roles of small town newspapers includes being “watchdogs of local government.” This role keeps local governments on their toes and increases efficiency.
So exactly how does the lack of a local newspaper translate into higher taxes? Lenders to municipal governments understand the role of newspapers with regard to local government efficiency. If they see that a town has no local newspaper, they consider this weakness and tend to ask for a higher interest rate when lending for things like public buildings, roads, schools, etc.
The study, “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance,” found that municipal borrowing costs increase by 5 to 11 basis points in the first few years after a local newspaper closed its doors. This means taxes go up roughly $70 for the average taxpayer, according to the study.
I’m not making a case against taxes here – public buildings, roads, parks, schools, etc are wonderful and essential and I am happy to pay taxes for them. My point is that local newspapers are an important part of making sure our taxes are used in the most effective ways possible to secure the public goods our communities need to thrive.
*Previously published as a column by Quest Lakes in the MVN in Aug. 2018.
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