That's a radical idea! Unfortunately, it gives a lot of ammo to the "anti-socialist" people who are vehemently against anything "public" funded by tax payers. Look at what's happening in the Nordics for example, where pretty much everyone supported public radio/TV at least when I was growing up, but nowadays a bunch of political parties are trying to have it removed/reduced.

There's also issues when the watched are funding the watches. If the council funds the newspaper, then the newspaper reports badly on the council, then the council can reducing funding for the newspaper.

You need it to be independent, so how can you fund it. Perhaps a separate precept on the council tax bill which is set separately (say by national government)

The BBC funding model attempts to do this at a national level, but of course nowadays that's not sustainable - part of the failure of the old civic minded establishment in favour of the new edgy profit minded establishment

Nordic public broadcasting is some of the lowest quality news media you can find. They're not a good example, unless the job of public service media is to only support one or two political parties at all cost (you know which ones).

Edit: Just an example. The funniest thing they've been doing regularly for decades now is when they go out on the streets with a camera to ask random strangers - the common man - about what they think about some recent development, like "What do you think about Trump?".

But the "random stranger" common man on the street is actually a politician from the journalist's own party who has dressed up and showed up on a pre-agreed place and time.