The county board meeting in Wausau, Wis., on Aug. 12, 2021, got contentious fast. Nobody disputes that.

But what happened about 12 minutes in, as members of the north-central Wisconsin community squabbled over a resolution intended to promote diversity and inclusion, has become the subject of a bitter legal fight that threatens to bankrupt one of the few remaining sources of local news in the area. First Amendment experts say the case highlights a troubling trend of wealthy and powerful people using defamation law as retribution.

Acting on a tip from a reader, The Wausau Pilot & Review reported that during the meeting, the owner of a shredding and recycling company, Cory Tomczyk, called a 13-year-old boy a “fag.” Mr. Tomczyk, who is now a Republican state senator, denied using the slur and demanded a retraction. When The Pilot & Review stood by its article, Mr. Tomczyk sued.

Three additional people who attended the meeting later gave sworn statements that they had heard Mr. Tomczyk use the word. And during a deposition, he admitted having said it on other occasions.

In late April 2023, a judge dismissed the lawsuit, ruling that Mr. Tomczyk had not met the legal standard for proving that the report defamed him.

But that was not the end of the matter for the small and financially pinched Pilot & Review, a nonprofit that has already racked up close to $150,000 in legal bills from the case. Mr. Tomczyk has filed an appeal. And the publication’s founder and editor, Shereen Siewert, said she has no idea how she can continue paying both her lawyers and her staff of four.

“Every time I open the mail,” said Ms. Siewert, describing how she dreads finding a new bill, “I want to throw up.”

“Those dollars could be going to pay reporters for boots on the ground coverage, not paying legal fees for a lawsuit that appears designed to crush us,” she added.

As politicians have grown more comfortable condemning media outlets they view as hostile — banning reporters from covering events, attacking them on social media, accusing them of being an “enemy of the people” — some public officials have started using the legal system as a way of hitting back. Former President Donald J. Trump has filed numerous unsuccessful defamation lawsuits against news organizations. Late last month a federal judge threw out his latest — a $475 million suit against CNN. Other prominent Republicans have followed his lead, including Devin Nunes, the former Republican congressman Mr. Trump hired to run his social media network, Truth Social. Mr. Nunes has sued several outlets, including The Washington Post and CNN, for publishing stories that were unfavorable to him. In Mississippi, former Gov. Phil Bryant is suing a news organization over its Pulitzer Prize-winning coverage that exposed how he misspent state welfare money to build a volleyball stadium.

The Wisconsin case, First Amendment experts warned, shows how a single defamation suit can become a cudgel against the media in a way the law never intended. For small local news organizations, many of which are barely getting by financially, the suits threaten to put them out of business.

That is the case with The Pilot & Review, even though there is scant evidence that it reported anything false — let alone that it did so with “actual malice,” the long-established burden of proof that public officials like Mr. Tomczyk must meet in a defamation case.