When the Nevada Legislature convenes Feb. 1, lawmakers will be walking on a budget tightrope, balancing efforts maintain state services, expand others and mold a plan for the Silver State’s presumed long and painful emergence from the pandemic and subsequent economic debacle.
Fiscal conditions are bad, but they could have been worse. Projected revenue shortfalls are less than expected, the state’s reserves will plug part of the budget hole, and Democrats’ control of the U.S. Senate is expected to result in substantial aid for all financially-strapped state governments.
Although two tax measures backed by the Clark County teachers union qualified to be on the Legislature’s agenda, and other interest groups have lobbied for new taxes, additional levies are unlikely this session. Democratic Gov. Steve Sisolak hasn’t supported new taxes; they are a anathema to state Republican leaders. And, thanks to a constitutional amendment in 1994, new levies require a two-thirds vote of the Legislature to pass into law.
“There’s not a lack of appetite among Democrats, and even some Republicans, for seeking new revenue sources,” said Fred Lokken, a political science professor and chairman of the political science department at Truckee Meadows Community College in Reno. “That two-thirds requirement has stymied state government from being able to properly fund government… You just can’t rub two-thirds of the state Senate together to make that happen.”
Some good news
The state’s revenues are crippled by the economic crisis, but they never sunk as low as planners’ expectations. Nevada’s $8.69 billion general fund budget for the next two years is a 2% decrease from the previous two years and is set against $9.7 billion in state agency budget requests. Those numbers require a fiscal juggling act as state officials look down the post-pandemic path to recovery.
In his “State of the State” address broadcast on Jan. 19, Sisolak took aim at rebuilding Nevada’s pandemic-stricken economy by helping small businesses, increasing technical education, creating 165,000 new jobs within 10 years, and modernizing the state’s old and overburdened computer systems. He laid out plans for creating new jobs, expanding technical education and increasing Nevadans’ access to clean energy
“Nevadans are battle born. We face our challenges head on. We will get through this difficult time together, because the State of our State is determined, resilient, and strong.”– Gov. Steve Sisolak, State of the State address.
Lokken, who recently discussed the coming session with several lawmakers on both sides of the aisle, said the budget will be front and center when legislators return to Carson City Feb. 1. “First, they need to figure out how to fill the hole in the budget,” he said. “I’m thinking that any policy issues will probably have to wait until May (near the end of the session).”
Increasing share of federal grants
Sisolak’s recommendations include restoring budget cuts made during the summer, including reinstating $25 million to the University of Nevada, Las Vegas’ School of Medicine and restoring a 6% rate reduction to Nevada’s Medicaid program. He said his goal is to increase Nevada’s share of federal grants by $100 million over the next two years and an increase of $500 million a year by 2026.
His executive budget proposal is consistent with “the emergency we are currently in,” he said, but he noted that the Nevada Economic Forum’s dire prediction in June of an even worse revenue shortfall improved by about $418 million.
Still, there will be belt-tightening: the $8.5 billion revenue projection falls about $1.2 billion short of the $9.7 billion that agencies were asking. Higher education will suffer the full 12% cut that all state agencies were required to prepare for; some other agencies’ budgets will be pruned by varying percentages. State worker furloughs that were imposed last summer won’t be continued. A few agencies are targeted for a boost in expenditures and the budget proposal includes funding for new recovery-related initiatives.
‘Nevada Job Force’
The governor touted the creation of a Nevada Job Force, a program that would rely on Nevada’s leading companies to fund, design and manage training programs to prepare residents for jobs in high-tech and other sectors. He also backed the creation of a Remote Work Resource Center to help Nevadans find remote employment opportunities “across the globe.”
In addition, Sisolak wants the state’s community college system, which is now under the governance of the state’s university system, to be spun off under “a new independent authority that will focus on making Nevadans job ready.”
Energy and infrastructure
He urged the passage of a “bold energy bill establishing our commitment to increased transmission, storage, and distribution of all forms of clean energy.” The measure, he said, would attract new industries, including electric-vehicle manufacturing, parts manufacturing and lithium mining.
The budget recommendation includes $75 million earmarked for capital projects and the creation of a State Infrastructure Bank. That institution would help leverage outside capital to fund infrastructure projects that would include broadband for rural counties, renewable energy and road improvements. He said state agencies and local governments must fast- track billions of dollars in federal infrastructure projects stalled at the starting gate.
Help for small businesses
During the pandemic, the state has injected about $50 million into small businesses and Sisolak said another $50 million will be earmarked for added support.
Lt. Gov. Kate Marshall, Sisolak said, will be in charge of developing a Small Business Advocacy Center to help small firms navigate available resources, including applying for up to $10,000 in grant funding to help the companies stay afloat. He also proposed setting up business incubators, called Innovation Zones, aimed at cultivating new companies, research opportunities and new technologies.
Sisolak ruled out taxpayer-funding and tax abatements – the latter a tactic used by former Gov. Brian Sandoval to attract Tesla to Nevada – but he provided few details as to where the money for the Innovation Zones would be found. He said Blockchains, LLC, has indicated interest in investing in such a zone in Northern Nevada that would “create a smart city… that would fully run on blockchain technology.”
Blockchain is a digital ledger system that records information in a way that makes it difficult or impossible to change, hack, or cheat the system. The information is duplicated and distributed across the entire network of computer systems.
‘New energy economy’
His goals, he said, recognize that “it’s not enough to just aim for a full reopening of our current economy. We must look forward to the kind of economy that will let our state prosper in the future.”
Modernizing the state’s antiquated data technologies, he said, is another priority to position Nevada for the post-pandemic future. The widespread layoffs in the spring laid bare the shortcomings of the state’s antiquated and overwhelmed unemployment system. The Department of Employment and Training and rehabilitation (DETR) had been administering fewer than 20,000 unemployment claims per week in February, a workload that soared to about 370,000 claims per week after March.
Chaos reigned. By August, harried DETR workers had a backlog of 243,000 claims still awaiting verification, yet at the same time fraudulent claims were rampant. A bottleneck in processing claims continues.
A plea for unity
With the Biden administration at the helm in Washington and both houses of Congress under slim Democratic majorities, Sisolak said he is hopeful that the federal government will get behind significant support for the states. That support, he said, “is critical and it’s outrageous that it hasn’t arrived already.”
He concluded his address with a plea that the fierce polarization of the last four years must end. “It has to end. (The division) is breaking down trust in our institutions and threatening our ability to solve the problems we face,” he said. “This is America. This is Nevada. And we need to pull together.”
The GOP response
Assembly Minority Leader Dr. Robin Titus (R-Wellington), who also spoke Jan. 19 in a pre-recorded address, was critical of Sisolak’s actions in shutting down businesses to arrest the spread of the contagion. The governor’s executive powers should be restricted, she said. The March shutdown was “devastating,” and “60%” of business that were forced to close down never reopened. Even harsher restrictions, she said, would further cripple the state’s already-withered economy.
“Any blanket government shutdown is not sustainable and threatens the livelihood of many Nevadans still trying to recover from the first mandatory shutdown,” Titus said.
Fighting mail-in ballots
Titus also called for “election reform” and said GOP lawmakers will introduce a number of bills on the subject, including a proposal to restrict mail-in ballots.
Some Nevada Republicans have made repeated allegations of systemic fraud involving mail-in ballots that were sent to the state’s registered voters in both the primary and the general election. Yet, no evidence of widespread fraud ever surfaced in Nevada or anywhere else; lawsuits alleging such fraud were quickly thrown out of the courts. In addition, Nevada Secretary of State Barbara Cegavske, a Republican, verified that no large-scale fraud occurred in either Nevada election and that the mail-in system was a success.
Liability shield for doctors
Titus noted that the pandemic “exposed the fault lines in our healthcare system. This is allowing us to implement common-sense reforms that will provide equitable and accessible healthcare to all Nevadans.” She cited a study by the University of Nevada and the American Association of Medical Colleges that ranked the Silver State 48th in the nation in the number of primary care physicians per 100,000 people.
“We must expand our healthcare workforce to provide efficient and affordable healthcare to all communities,” said Titus, a primary care physician. “That’s why Republicans will continue to bring forth solutions that keep our doctors in Nevada by removing burdensome regulations and creating incentives for new doctors.”
The minority leader also advocated for civil liability protections for medical professionals. “They deserve this for risking their own wellbeing to put patients first during the pandemic,” she said.
Groups back new taxes
The minority leader also condemned a proposal by the Clark County Teachers Association for sales tax and gaming tax increases in order to bolster teacher salaries. “Attempting to manipulate Nevada’s complex tax structure via ballot initiatives is both irresponsible and short-sighted and will hurt Nevada families.” Titus said.
Teachers aren’t the only ones drawing attention to the state’s consistent inability to adequately fund its services. In December, leaders of 60 organizations – including unions, progressive groups and service/health-care organizations whose members and clients have been severely affected by the pandemic and its economic fallout – signed a letter advocating for new revenue sources.
The groups included Battle Born Progress, the Progressive Leadership Alliance of Nevada, the Nevada State Education Association and the Culinary Union Local 226. Also represented in the letter were Crisis Support Services of Nevada, Food Bank of Northern Nevada and Family Counseling Service of Northern Nevada, as well as the Nevada Chapter of the American Academy of Pediatrics, Immunize Nevada, Rural Nevada Health Network, and UNLV School of Medicine.
Titus called for an effective and accountable government that works with the private sector to provide a working framework and is answerable to Nevadans.
“During the upcoming legislative session, we must rein in the overreach of our state government and safeguard individual liberty,” she said.
Nevada’s bi-annual legislative session is scheduled to start Feb. 1 and run for 120 days. Lawmakers will meet in person, but visitors to sessions will be restricted.