Democrats push five major budget bills forward early as veto threat looms

23 May 2023

While Democratic lawmakers and Republican Gov. Joe Lombardo have drawn partisan battle lines over a wide range of issues this legislative session, differences over the state budget — namely disagreements about state employee pay and education funding — have emerged as a major divide between the two sides.

Last week, Lombardo’s chief of staff said the governor would veto the state budget if his priorities aren’t passed — an overt threat that would require Lombardo to reject the five major bills that implement the state budget, which covers a two-year period running from July 1, 2023 to June 30, 2025 because the Legislature only meets every other year.

Those bills represent months of work conducted by the Legislature’s budget committees and fiscal staff to vet and change the governor’s recommended budget, which was first unveiled in January. The five bills allocate a record $10.6 billion in tax revenues over the next two years from the state’s general fund, and authorize spending by agencies funded by fees, as well as billions of dollars in spending of federal dollars. 

That adds up to a record-breaking state budget of $53 billion for the next two years, legislative fiscal analysts told lawmakers Monday. Read more about what’s included in the five bills further below.

In the face of Lombardo’s veto threat, Democratic lawmakers have swiftly advanced the budget implementation bills, even introducing them on Monday, nine days earlier than the anticipated introduction date of May 31.

Introducing the bills at the end of May would have allotted lawmakers less than six days to pass them out of both houses — creating a timing crunch if a potential gubernatorial veto were to come down before the session wraps on June 5, or necessitating a special session if the bills were vetoed after sine die.

Instead, lawmakers introduced the budget bills early and are seeking to pass them out of both houses in the coming days, potentially giving Democratic lawmakers the opportunity to override a gubernatorial veto before the end of the session. 

Democratic lawmakers would need the support of one Republican senator to achieve the constitutionally required two-thirds majority vote to override a veto, as Democrats hold a supermajority in the Assembly (28 of 42 seats) but fall one seat short in the Senate (13 of 21 seats).

One of the bills — the Capital Improvement Program, which renews a statewide property tax — also requires a two-thirds majority in both houses to first reach the governor’s desk because of the included tax.

Assembly Speaker Steve Yeager (D-Las Vegas) highlighted the urgency of moving the bills forward, saying on Tuesday that lawmakers hope to get the bills over to the governor “in the next couple of days.”

After legislative fiscal staff presented bill details to lawmakers on the budget committees on Monday night, the Assembly and Senate reconvened to introduce the bills. The bills received hearings Tuesday morning, and all but one passed out of committee on party-line votes after legislative leaders waived normal rules to quickly move the bills forward.

Republican lawmakers on the Assembly Ways and Means Committee cited concerns about the speed of that process and not having enough time to review the measures in detail as reasons for voting against them. Assembly Minority Leader P.K. O’Neill (R-Carson City) said his caucus had a meeting scheduled with fiscal staff later in the day Tuesday to ensure “everything is sustainable” in the budget, but said that Republicans may support the bills when they come up for a vote from the full Assembly.

Senate Republicans also highlighted concerns they previously expressed throughout the budgeting process, saying they thought too much money was going to cover ongoing expenses that would need to be sustained through future budget cycles, and recommended that dollars be allocated to more one-shot expenditures.

But Democratic lawmakers across both Tuesday morning meetings emphasized that the vast majority of each of the bills was based on Lombardo’s recommended executive budget, and pointed to the lengthy budget review process that led to the provisions baked into the implementation bills.

“This budget bill didn’t just miraculously appear yesterday when it was introduced,” Sen. Rochelle Nguyen (D-Las Vegas), said during a Senate Finance Committee meeting on Tuesday. “In fact, this bill is a culmination of the last three-and-a-half months of vetting.”

Read about each of the five budget implementation bills below, or click on one of the links to jump to a specific bill:

K-12 funding

The Appropriations Act

State worker pay

Capital Improvement Program

The Authorizations Act

K-12 FUNDING (SB503)

The state constitution requires legislators to pass the K-12 education budget before all other spending bills. This year, that includes $11.2 billion distributed through the still relatively new Pupil-Centered Funding Plan, a funding formula passed in 2019 that overhauled and replaced the 50-year-old Nevada Plan. 

But even as Democrats and Republicans have lauded a more than $2 billion increase to the state’s education spending compared to the last biennium (made possible by increased tax revenue), the formal application of the education budget has emerged as one of a handful of key pressure points between a Democrat-controlled Legislature and Lombardo’s office. 

Earlier this month, a joint legislative budget committee split on party lines in a vote to advance the initial K-12 budget recommendations. That stemmed from a running dispute on whether the committee would use $291 million in excess money in the state’s education-specific rainy day account to fund programs proposed in a separate education omnibus bill from Lombardo (they did not). 

That dispute carried into Tuesday’s hearing. Ahead of the vote, Senate Minority Leader Heidi Seevers Gansert (R-Reno) again touted the new $2 billion in education spending but also raised the specter of a “fiscal cliff” from directing one-shot money from the stabilization account back to the funding formula that supplies general per-pupil funding. 

“When you use rollover money for ongoing expenses, one-shot money for ongoing expenses, then the budget itself is not structurally sound,” Seevers Gansert said. 

But Democrats on the committee bristled at the criticism.

“I guess after spending 13 years in this building, I’m tired of the stupid politics, I’m tired of the games around the money,” Sen. Dina Neal (D-North Las Vegas) said during the hearing. 

The Senate Finance Committee voted 5-3 on party lines to advance SB503 to the Senate floor. 

That K-12 funding bill includes: 

The toplines: In all, lawmakers appropriated $5.5 billion in 2024 and $5.8 billion in 2025 to the Pupil-Centered Funding Plan, which draws money both from the state’s general fund ($1.1 billion in 2024 and $1.5 billion in 2025) and the State Education Fund ($4.4 billion in 2024 and $4.3 billion in 2025), which is a special budget account devoted solely to education funding and filled by specific tax revenue, including (but not limited to) sales taxes, room taxes, marijuana taxes and a special mining tax

Per-pupil funding: $12,863 in “total public support” per pupil in the 2023-2024 fiscal year, and $13,368 in per-pupil funding in the 2024-2025 fiscal year. In this context, “total public support” is a combination of several different per-pupil funding sources, including a base amount provided by the funding formula, extra money weighted by the formula for certain categories, such as low-income or special education students, and any additional tax or other state money directed toward education.

Adjusting for county size: Those base formula amounts account for only a fraction of the total funding per student, which then fluctuates based on funding adjustments made for the size of the school district. For instance, a base amount of $8,966 per pupil in 2024 rises to $9,045 in Clark County, but jumps to a maximum of $36,047 in sparsely populated Eureka County. That overall base figure increases again to $9,414 in 2025. 

Weighting the base: That money may also be affected by certain weights added on top of base funding. Weights act as a multiplier on the base per-pupil amount for English Language Learners (0.45), at-risk students (0.35) and gifted and talented students (0.12). Those numbers are slight tweaks to those proposed in the governor’s budget, which weighted English Language Learners (ELL) students at 0.5, and at-risk students at 0.3. In dollars and cents, that totals $435.7 million in biennial ELL funding, $407.3 million for at-risk students, and $16.4 million for gifted and talented students. 

What’s different?: A Lombardo recommendation not included in this bill is a separate index — the Cost of Education Index, designed to adjust spending for the increased cost of running smaller schools in smaller districts — and instead a uniform index of 1.0. The move functionally removes the index, a change that was recommended by the Commission on School Funding. But outside the bill, lawmakers have also directed the commission to study how a new calculation for the cost of education could be applied to the funding formula in future budgets.  

Transportation and food: School districts also get additional money directed toward food services, transportation and students with disabilities. That money varies widely from district to district, with the largest chunks going to Clark County (which, for instance, receives $140 million for transportation in 2024).

Special education: The bill also includes $470.6 million in biennial funding from the general fund for the state’s Special Education Program (money recommended by the governor), with an extra $24.9 million in new money allocated by the money committees for a “minimum level of education funding,” dollars that would be directed toward meeting a minimum per-pupil amount at certain targeted districts, charter schools and university schools for gifted pupils. 

Where do lawmakers and Lombardo differ?: One of the main points of contention is a tension over whether or not the state should earmark so-called “categorical” funding, or specific pots of money outside the main formula for specific programs (with the governor in favor and Democrat legislative leaders opposed, in rough terms). For instance, $5.3 million recommended by the governor for a dual-language pilot program was denied, with lawmakers instead appropriating that same amount from the general fund to the Pupil-Centered Funding Plan for the purpose of funding that program. 

Rainy day money: In simple terms, the bill also appropriates $851.7 million in 2024 and $878.9 million in 2025 to the Education Stabilization Account, a rainy day fund specifically for education filled at 15 percent of the State Education Fund (a percentage that lawmakers have separately proposed boosting to 20 percent after 2025). Existing law allows an interim committee of legislators to use the fund to help ease cash flow to education accounts, essentially solving a problem in which specific tax revenues filling the State Education Fund arrive unevenly based on existing calendar-specific deadlines for certain tax sources. 

THE APPROPRIATIONS ACT (AB520)

This is the largest bill in terms of appropriations from the general fund, a budget account that holds revenue from the state’s major tax streams, including sales, gaming and business taxes.

The projected size of the general fund for the next two years — $11.6 billion after tax credits — was finalized in May by the Economic Forum, a state-appointed panel of private business experts.

AB520, a bill generally dubbed “The Appropriations Act,” includes more than $7 billion in appropriations from the general fund, a more than $1 billion increase from the previous budget period. Major projects and programs in the bill include:

$2.41 billion for Nevada Medicaid

$255 million for University of Nevada, Reno and $379 million for the University of Nevada, Las Vegas

$200.2 million to support Southern Nevada Adult Mental Health Services and $50.6 million for Northern Nevada Adult Mental Health Services

$49 million for the Office of Early Learning and Development

$35 million for assessments and accountability within the Department of Education

$10 million for the need-based Silver State Opportunity Grant Program for college students

$9.5 million for the Department of Indigent Defense Services

$6.4 million for the Silver State Modernization Approach for Resources and Technology, or Smart 21 project, which was aimed at overhauling the state’s human resource and finance operations systems. Lombardo pulled the plug on the program in March, and the funding will be allocated to the latest iteration of the project.

$5 million for the health care public option within the Division of Health Care Financing and Policy

$2.5 million to the secretary of state’s office for Help America Vote Act election reforms

$642,000 for the Office of New Americans

STATE WORKER PAY BILL (AB522)

Lombardo and lawmakers have made increasing state worker pay a top priority, quickly moving forward earlier this session with a bill to provide the first pair of quarterly $500 retention bonuses to state employees.

But since that bill (AB268) was signed by Lombardo in early April, Democratic lawmakers have pursued different plans for state employee compensation that they’ve argued will do more to increase state workers’ take home pay. That includes additional cost of living raises, on top of the raises proposed by Lombardo of either 8 percent or 10 percent in the 2024 fiscal year and 4 percent in the following year, as well as reduced quarterly bonuses of $250 and a reduction in what employees pay in retirement contributions.

The two sides have butted heads, with Senate Republicans opposed to a Democrat-backed bill that would have granted additional 2 percent raises for state workers before the end of the 2023 fiscal year in June and arbitration awards previously approved for a pair of state unions. That bill, SB440, has stalled since passing out of the Senate — a delay Democrats blame on Lombardo.

The state worker pay bill includes those additional Democrat-proposed raises on top of the salary adjustments proposed by Lombardo. Depending on a state worker’s bargaining unit, they would be granted a raise of 10 percent, 12 percent or 13 percent in the first year, followed by 4 percent in the next year. Separately, the bill includes a proposal from Lombardo to provide one-, two- and three-grade pay increases, roughly amounting to a 5 percent to 15 percent increase in salary, for state law enforcement, such as highway patrol troopers.

Through the bill, Democratic lawmakers may also force Lombardo into a decision about some of their priorities for employee pay. The bill includes funding for additional 7 percent raises for state workers in the 2025 fiscal year, but those raises would only take effect if Lombardo does not sign a Democrat-backed bill, AB498, that would trim in half the amount employees contribute to their state retirement savings.

The bill also includes a provision from Lombardo’s government modernization bill, SB431, that would eliminate a cap on state worker salaries, currently set at 95 percent of the governor’s salary of about $170,000. That bill received a hearing last month, but has not moved forward since.

CAPITAL IMPROVEMENT PROGRAM (AB521)

Alongside a two-year budget that is the largest in state history, the state is also entering the upcoming budget period with a roughly $2 billion surplus as sales and gaming tax collections have skyrocketed past expectations amid a period of high inflation and the state’s rebound from the COVID-19 pandemic.

With the extra cash on hand, Lombardo laid out plans to upgrade and build out the state’s office buildings.

“My capital improvement budget includes funding for refurbishment of existing buildings and money for three new state office buildings, so our employees can provide services to our constituents in a safe and stable workspace,” he said during his State of the State address.

Across a variety of projects, the bill authorizes nearly $1.2 billion in executive branch capital improvement projects and $214 million in legislative branch capital projects. Those are funded through a combination of appropriations from the general fund and general obligation bonds, which the state pays off through property taxes.

Here are some of the projects included in the bill:

$213.9 million for state offices in Las Vegas to replace the existing Grant Sawyer building

$158.5 million for the construction of an administration building at the site of the demolished Kinkead Building in Carson City

$105.9 million to construct a new DMV office in Southern Nevada’s Silverado Ranch area

$99.8 million for the remodeling of the Southern Nevada State Veterans Home

$74.5 million for improvements for office buildings purchased in Las Vegas

$62 million to the Nevada System of Higher Education for deferred maintenance costs

As part of capital improvements for the Department of Health and Human Services (DHHS), lawmakers allocated $37.8 million for deferred maintenance for DHHS and $18.2 million for advance planning at the Southern Nevada Forensic Facility

$30 million for the seismic retrofit and renovation of the Heroes Memorial and Annex in Carson City

$23.3 million for the visitor’s center at the Nevada State Railroad Museum in Boulder City

$22.3 million for building purchases and improvements

$21.4 million to replace doors, locks and security glazing at the Southern Desert Correctional Center and another $10.6 million to upgrade perimeter security fencing

$17 million for the Southern Nevada Small Arms Range as part of the Nevada Army National Guard

$16.7 million for the construction of mail services building for the Department of Administration in Carson City

$15.5 million for the North Las Vegas state veterans home

$10.7 million for improvements to the Department of Corrections’ wastewater system

$9.1 million for the east slope transmission upgrade for the Marlette Lake water system

$8.7 million for the statewide roofing program

$8.3 million for the statewide fire and life safety program through the Nevada Army National Guard

$6 million for the statewide paving program

$5.8 million for a headquarters building at the Carson City Department of Public Safety

$5.5 million to install security cameras at the High Desert State Prison and another $7.4 million to replace water controls at the prison.

$5.4 million for a new water chiller at the Desert Research Institute’s Northern Nevada Science Center

$4.4 million for the statewide Americans with Disabilities Act (ADA) program

THE AUTHORIZATIONS ACT (SB504)

This bill authorizes state agencies to expend funds not appropriated from the general fund and Highway Fund, essentially allowing agencies to spend federal funds and certain fees. Here are some major authorizations included in the bill:

$10.79 billion for Nevada Medicaid, a record high amount driven by increasing enrollment levels

$2.27 billion for COVID-19 relief programs in the governor’s office, a pot of money that includes federal relief funds from the American Rescue Plan

$1.18 billion for the Public Employees’ Benefits Program, which provides insurance to state workers

$1.03 billion in COVID-19 funding for the Department of Education

$554.4 million for nutrition education programs from the Department of Agriculture

$432.6 million for the Governor’s Office of Science, Innovation and Technology, which is concentrated in the 2024 fiscal year and buoyed by massive federal grants for broadband services

$375 million for the Home Means Nevada Initiative, an affordable housing program funded with American Rescue Plan funds

$121.7 million for the Cannabis Compliance Board

$62.9 million for the State Small Business Credit Initiative, which grants awards for small business growth, through the Governor’s Office of Economic Development

$12.2 million in grant funding from the Help America Vote Act for the secretary of state’s office

The post Democrats push five major budget bills forward early as veto threat looms appeared first on The Nevada Independent.

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