Assembly Majority Whip Jim Wheeler, State Controller Ron Knecht and the group of Republicans presented the Balanced Plan for Growth: A Budget for the New Nevada, an alternative state budget than the one proposed by Governor Brian Sandoval Tuesday afternoon.
“The key feature of the Plan is that we work from both the revenue and expenditures sides to get to a solution roughly midway between the available revenues according to the Economic Forum and the total spending proposed by the Governor,” Wheeler said. “We can balance the State’s budget with no new taxes and no increased taxes.”
This comprehensive budget proposal supports the Governor’s recommended 2015-2017 budget by funding, to the extent possible, the spending increases proposed by Gov. Sandoval. It relies on a balanced approach, using both revenue enhancement and spending restraint for a reasonable total spending figure of $6.923 billion.
“Our plan secures the values held by Governor Brian Sandoval and all Nevadans, especially for educating our children and leaving them a healthy, growing economy,” said Knecht, the State’s Chief Fiscal officer. “And we eliminate the need for the Business License Tax and actually let the ‘sunset’ taxes expire.”
“The Plan is our attempt to move the process forward and avoid a Legislative stalemate by providing a work-in-progress budget between current spending and the Governor’s proposed budget,” said Knecht. “Our proposal is not the final word, but instead a constructive Plan that is conciliatory and fully respectful of the roles of the Governor and the Legislature.”
The Balanced Plan for Growth achieves this goal by prioritizing program needs and increasing local control over spending. It secures the key values of the Governor’s proposed budget while avoiding divisive and destructive tax increases. The Plan:
- Rejects new or increased taxes on businesses and individuals to ensure that Nevada continues to offer an inviting climate that will attract the most talented and ambitious individuals to Nevada to pursue their dreams – the same climate that has attracted world class companies like Tesla to our state.
- Allows the so-called “sunset” taxes to actually sunset in order to restore stability and predictability to Nevada’s economic climate.
- Recommends funding over 98% of the $2.88 billion in General Fund appropriations to support K-12 education requested in the Executive Budget — including $389.2 million intended to offset the loss of revenues from an expiring temporary increase in the Local School Support Tax.
- Moves K-12 spending for specific education programs into a Block Grant, giving local schools increased control over how they allocate both the resources they currently have to improve education as well as the increased education spending proposed by Governor Sandoval on new initiatives to improve our schools.
- Preserves the Governor’s proposed technology enhancements and facilities maintenance, much of which has been deferred over the past six years.
- Maintains the Governor’s recommendation to eliminate furloughs for state workers going forward.
In his January 2015 State of the State address, Gov. Brian Sandoval outlined a bold vision for a “new Nevada.” His enthusiasm for this vision was contagious, and it is shared by every Republican in Nevada.
“After much thought, discussion and careful deliberation, we believe that we have developed a proposal to allow us to achieve the vision of the new Nevada by creating a pathway to achieve Governor Sandoval’s vision through a broad consensus of all Nevadans,” said Wheeler.
The Balanced Plan for Growth empowers our local schools to decide the best and most effective way to use of their resources to satisfy the unique needs of every classroom. This lets existing dollars be spent more effectively, so that the $50 million in new money flowing into our classrooms will give the biggest boost possible to our schools.
However, it is not enough to ensure that Nevada’s students graduate with the skills and abilities to lead the new Nevada. If we succeed in education, but fail to make Nevada the most attractive business climate in the world, our children will take their talents to places where they are better able to succeed. We must not penalize success; we must instead teach our children that we value their success.
“By avoiding new taxes and tax increases, the Balanced Plan for Growth assures that we leave our children a legacy of economic growth and opportunity,” said Knecht. “We believe it is not only possible to accomplish our goals using Nevada’s existing revenue base, but we feel strongly that it is our responsibility to do so.”
“Nevada voters spoke loud and clear in the November election. They rejected the status quo and made it clear that they wanted their representatives to govern and improve the quality of our schools without raising taxes,” said Wheeler. “In 2014, the most popular choice on the ballot was opposition to a new business margins tax based on gross receipts to increase education spending. Opposition to the measure received broad, bipartisan support, and led to the defeat of the tax proposal by a margin of nearly four-to-one.”
Knecht added, “The Balanced Plan for Growth honors the voice of Nevada voters while supporting Governor Sandoval’s vision for the new Nevada. This is a start on the road to our shared goals, and we believe this Plan gives us the best opportunity to turn our shared vision into reality.”
This comprehensive budget proposal takes a balanced approach using both revenue enhancement and spending restraint to arrive at a reasonable total spending figure of $6.92 billion. This figure is midway between the Economic Forum’s revenue projections and the Governor’s recommendations. The proposal is a working document that will require additional vetting through the legislative process in order to determine the best methods for filling a remaining budget gap of $46.3 million, although it is possible that existing proposals have understated revenues due to conservative assumptions.
This proposal seeks to support the Governor’s recommended budget by funding, to the extent possible, the spending increases proposed by the Governor. This is done by prioritizing program needs and increasing local control over spending. It secures the key values of the Governor’s proposed budget while avoiding divisive and destructive tax increases.
Expenditures – This budget:
- Funds Governor Sandoval’s proposals for new measures to improve K-12 education to the greatest extent possible.
- By utilizing block grants, makes better use of existing and proposed new categorical spending for K-12 education. Block grants allow savings, while still providing significant increases in overall spending in areas where the Governor has identified the need for increased spending.
- Gives local school districts the flexibility to meet the unique needs of every school by tailoring expenditures toward the specific needs of each classroom.
- Carefully increases or restrains the Governor’s recommended expenditures based on a careful examination of prior trends versus current requests at the individual account level.
- Maintains undergraduate and community college programs, and includes additional funding for community colleges that provide essential technical training.
- Provides for the projected caseload expansion in Medicaid, but controls costs by temporarily suspending most rate increases for provider reimbursements.
- Preserves the Governor’s proposed technology enhancements and facilities maintenance, much of which has been deferred over the past six years.
Revenues — This budget:
- Uses the best of the revenue measures proposed by Gov. Sandoval over his tenure as governor in order to fund the operations of the State.
- Eschews new/increased taxes on businesses and individuals to enhance Nevada’s status as a desirable place to live and work and provide a basis for compromise and a consensus budget.
- Allows the so-called “sunset” taxes to sunset as scheduled in order to restore stability and predictability to Nevada’s economic climate.
- Extends the prepayment of mining taxes and suspension of certain deductions for the calculation of the Net Proceeds of Minerals tax.
- Holds employer contributions to employee pensions constant at current rates and requires all employees to contribute to their own retirements. It redirects $334 million in projected savings from this measure as a revenue source for public education.
In his January 2015 State of the State address, Gov. Brian Sandoval outlined a bold vision for a “new Nevada.” The new Nevada would become a leader in academic achievement in its schools and prepare future generations to succeed and thrive in an increasingly competitive and dynamic global economy. At the same time, the new Nevada would continue to diversify its own economy by growing new, high-tech industries at which the students exiting Nevada’s new, cutting-edge schools would become employed. Gov. Sandoval outlined a vision in which Nevada would become more resistant to the types of economic downturns that have plagued the Silver State in recent years by building industrial sectors less dependent on disposable income than those on which Nevada has traditionally relied.
The Governor’s enthusiasm for this vision was contagious, and it is shared by every Republican in Nevada.
After much discussion and careful deliberation, we, as fellow Republicans, offer a series of recommendations designed to improve the effectiveness of his plans in order to provide a more certain pathway for achieving the very vision he outlined to the Legislature.
At the center of this comprehensive budget proposal lies a pathway for improving the very element that Gov. Sandoval identified as being so critical for the success of the new Nevada: the academic achievement of our children. We provide a mechanism that allows education dollars to be allocated toward their highest and best use within each school so administrators can satisfy the unique needs of every classroom. By doing so, we allow existing resources to be deployed more cost effectively, even as we simultaneously infuse $50 million in new money into our classrooms.
A primary virtue of developing an educated and talented workforce is that it positions the next generation of Nevadans to not simply staff the firms launched by others, but to develop an entire spectrum of native-born enterprises. Armed with the talent, skills, and foresight to become successful entrepreneurs in their own right, it is our aim to position the next generation of Nevadans to not just follow, but rather lead the world into a new era of global prosperity. Thirty years from now, we anticipate the most innovative and sought-after brands in the world to have found their genesis in Nevada—at the hands of today’s students. It is in pursuit of that vision that we lay this foundation.
This foundation rests not only on developing the talents of our children, but also on ensuring them prosperity and opportunity by reviving economic growth. To do so, we must make Nevada the most attractive business climate in the world. If we fail in this, our children will take their talents to places where they are better able to succeed. We must not penalize success; we must instead teach our children that we value their success. We must also offer an inviting climate that will attract the most talented and ambitious individuals from around the world to relocate to Nevada to pursue their dreams.
For these reasons, we must limit the burdens we place on success and allow high-achieving individuals to keep the reward of their own labors. We have thus made a conscious decision to eschew all new forms of taxation on businesses or individuals and to maintain a stable, predictable tax structure that will safeguard our economic dynamism and encourage our children to achieve their full potential.
We believe it is not only possible to accomplish our goals using Nevada’s existing revenue base, but we feel strongly that it is our responsibility to do so.
The voters of Nevada have given Republicans a mandate to govern and improve the quality of our schools without raising taxes. In 2014, the most popular choice on the ballot was opposition to a new business tax based on gross receipts for which the proceeds were intended to be directed to education. Opposition to the measure received broad, bipartisan support and Republicans are aware that they benefitted electorally from the popularity of that opposition. Question 3 drew so many voters to oppose the imposition of a new tax that it failed by a margin of nearly four-to-one.
Fortunately, we have been able to draw heavily from the many constructive proposals offered by Gov. Brian Sandoval over the past four years. Key revenue planks of this budget proposal all originated in his first Executive Budget. We have updated these recommendations and refined them to pass judicial muster.
Our proposal also allows for more than $20 million in new spending on technology upgrades and facilities maintenance that have been deferred over the past several budget cycles.
We agree with Gov. Sandoval’s current recommendation to eliminate furloughs for state workers. We deeply value the work ethic and commitment demonstrated by our state workers over the past six years as they helped to alleviate the state’s financial difficulties by agreeing to furloughs and believe the time has now come to end that practice.
In the following sections, we outline our proposed changes within each functional area and conclude with a comprehensive budget proposal with detail at the individual account level.
|Legislatively Approved Spending, FY12 – FY15|
|Finance & Administration||$41,046,726||$40,981,174||$39,332,807||$52,966,226|
| Higher |
|Commerce & Industry||$45,818,310||$34,075,265||$47,374,019||$47,753,576|
|Special Purpose Agencies||$4,065,233||$4,044,884||$5,225,781||$5,231,491|
This budget proposal recommends $6.92 billion in General Fund spending over the 2015-2017 biennium. This amount represents a modest 5.0 percent increase over the legislatively approved amount of $6.60 billion for the 2013-2015 biennium. However, it would be an 11.6 percent increase over the legislatively approved budget for the 2011-2013 biennium, increasing overall per capita spending. (Nevada’s population has grown only 5.7 percent in that same time)
This recommendation is $391.4 million less than the Governor’s recommended budget of $7.31 Billion over the 2015-2017 biennium. The Governor’s recommended budget would represent a 17.9 percent increase over the legislatively approved budget for the 2011-2013 biennium. Further, it would amount to a 25.3 percent increase over the governor’s recommended budget of $5.84 billion for the 2011-2013 biennium.
The Balanced Plan for Growth limits the growth in state spending by basing many line-item recommendations on the governor’s recommendations for the 2011-2013 biennium, allowing for increases equal to the growth in population plus inflation. It also returns education spending that currently occurs outside of the General Fund using temporary revenues back to the General Fund. In 2009, the 75th Legislature approved a temporary increase of 0.35 percent in the Local School Support Tax, a statewide component of the sales tax that flows directly to state Distributive School Account without passing through the General Fund. Due to the pending expiration of this tax increase on June 30, 2015, the Balanced Plan for Growth makes an offsetting appropriation of $389.2 million from the General Fund to the Distributive School Account.
The Balanced Plan for Growth allows all temporary tax hikes approved by the 75th Legislature to expire as planned and does not impose any new taxes. It is balanced through a variety of mechanisms, including:
- Continuation of local property tax diversions first approved by the 75th Legislature and recommended by Gov. Sandoval in his 2011-2013 Executive Budget;
- Extending the requirement for prepayment of mining taxes;
- Continuing the elimination of health and industrial insurance premium deductions for the purposes of calculating the Net Proceeds of Minerals tax liability;
- Holding constant employer contributions to health insurance and retirement;
- Requiring all employees of the political subdivisions of this state to contribute toward their own retirement accounts in an amount at least equal to the employer contribution;
- Closing certain programs and sweeping reserve accounts
|Recommended Budgets, FY16 – FY17|
|Gov Rec: FY16||Gov Rec: FY17||BPfG Rec: FY16||BPfG Rec: FY17|
|Finance & Administration||$44,411,481||$42,180,534||$35,587,371||$34,957,445|
| Higher |
|Commerce & Industry||$73,966,167||$53,948,508||$36,759,174||$37,557,682|
|Special Purpose Agencies||$5,621,567||$6,015,271||$7,394,909||$7,468,613|
|General Fund Spending by Department|
|Department||Governor’s Recommendation||Plan for Growth|
|Attorney General’s Office||$18,526,332||$17,367,063||$15,002,218||$15,317,867|
|Colorado River Commission||$0||$0||$0||$0|
|Commission on Ethics||$163,865||$162,472||$163,865||$162,472|
|Commission on Mineral Resources||$0||$0||$0||$0|
|Peace Officer’s Standards||$0||$0||$0||$0|
|Commission on Post Sec Education||$304,254||$309,064||$304,254||$309,064|
|Dept. of Administration||$14,414,516||$12,470,385||$7,910,290||$6,684,772|
|Dept. of Agriculture||$3,570,305||$3,490,446||$2,162,874||$2,129,970|
|Dept. of Business & Industry||$1,786,833||$2,250,538||$1,651,319||$1,681,926|
|Dept. of Cons & Nat Resources||$29,887,055||$29,334,586||$26,820,045||$22,606,522|
|Dept. of Corrections||$259,477,639||$264,586,176||$257,018,735||$262,981,053|
|Dept. of Education||$1,413,800,191||$1,467,452,698||$1,430,025,820||$1,405,880,123|
|Dept. of Employment, Training & Rehab||$5,576,052||$5,694,463||$4,933,671||$4,991,405|
|Dept. of Health & Human Services||$1,042,900,374||$1,136,131,489||$984,420,368||$1,044,053,887|
|Dept. of Public Safety||$53,148,512||$54,432,850||$44,373,899||$45,173,751|
|Dept. of Taxation||$29,996,965||$29,710,149||$27,677,080||$28,272,673|
|Dept. of Tourism & Cultural Affairs||$3,603,143||$3,761,938||$2,893,178||$3,063,493|
|Dept. of Transportation||$0||$0||$0||$0|
|Dept. of Veterans Services||$1,533,269||$1,813,851||$1,533,269||$1,813,851|
|Dept. of Wildlife||$728,795||$718,233||$528,028||$531,612|
|Gaming Control Board||$30,542,040||$30,936,237||$27,325,109||$27,913,127|
|Judicial Discipline Commission||$837,860||$792,436||$737,622||$753,495|
|Legislative Counsel Bureau||$31,356,836||$30,898,693||$30,553,511||$30,898,693|
|Lt. Governor’s Office||$552,817||$587,758||$502,763||$512,818|
|Nevada System of Higher Education||$526,323,488||$535,736,286||$502,007,310||$490,428,447|
|Public Employee Benefits||$0||$0||$0||$0|
|Public Employee Retirement||$0||$0||$0||$0|
|Public Utility Commission||$0||$0||$0||$0|
|Secretary of State’s Office||$19,798,815||$23,030,548||$16,822,379||$20,381,806|
|Silver State Health Insurance Exchange||$0||$0||$0||$0|
|State Charter School Authority||$400,000||$0||$400,000||$0|
|Tahoe Regional Planning Agency||$1,831,166||$1,511,166||$1,831,166||$1,511,166|
At the center of the Balanced Plan for Growth is a strategy for dramatically improving the performance of pupils in Nevada’s K-12 education system. The Balanced Plan accomplishes this both by allocating new resources and also by allocating existing resources more effectively.
As recommended by Gov. Sandoval in his 2011-2013 Executive Budget, the Balanced Plan creates a Student Achievement Block Grant and moves all existing categorical spending into the block grant. This includes appropriations currently supporting class-size reduction, full-day kindergarten, professional development, early childhood education, career and technical education, and many others. The block grant allows school administrators to decide what the needs are at each individual school and to allocate these resources in proportion to those needs for any of the approved programs.
In addition, the Student Achievement Block Grant permits funds to be expended on any new categorical program recommended by Gov. Sandoval in the 2015-2017 Executive Budget, as well as on a program of teacher merit pay to support the Fund for Master Teachers.
A key point of flexibility in the Balanced Plan for Growth is that it allows school administrators to reallocate dollars currently used for relatively cost-ineffective programs toward relatively more cost-effective programs and to tailor those decisions toward the unique needs of every school. A growing academic literature, for instance, now finds that class-size reduction programs produce few positive results relative to the large expenditures required to sustain these programs. The Student Achievement Block Grant would allow school administrators to use the $350 million currently allocated for this program for alternative methods of improving student achievement if they find this literature convincing.
In addition to offering this flexibility, the Balanced Plan for Growth allocates an additional $50 million in new money to support the Student Achievement Block Grant.
In total, the Balanced Plan for Growth recommends $2.84 billion in General Fund appropriations to support K-12 education, including $389.2 million in appropriations intended to offset the loss of revenues from an expiring temporary increase in the Local School Support Tax. By comparison, the Executive Budget proposes to spend $2.88 billion on K-12 education through the general fund and the work program for the 2013-2015 biennium amounts to $2.55 billion.
|Student Achievement Block Grant|
|Existing Categorical, Rolled into Block Grant||FY16||FY17|
|Class Size Reduction||$171,993,055||$178,228,810|
|Regional Professional Development Programs||$7,560,948||$7,560,948|
|ELL – Zoom Schools||$23,453,000||$23,453,000|
|ELL – Zoom Schools Rurals||$1,497,000||$1,497,000|
|Full-Day Kindergarten Portable Classrooms||$0||$0|
|Kindergarten Class-Size Reduction||$24,347,106||$24,834,048|
|Ed Tech Hardware||$1,837,241||$1,837,241|
|Ed Tech KLVX||$392,329||$0|
|Jobs for America’s Graduates||$750,000||$750,000|
|Vocational Student Org||$106,998||$106,998|
|Early Childhood Education||$3,338,875||$3,338,875|
|Special Elementary Counseling||$850,000||$850,000|
|School Library Media Specialist||$18,798||$18,798|
|Speech Pathologists Increment||$526,784||$526,784|
|Additional Approved Expenditures Through Block Grant|
|Read by 3|
Social Workers Grants to Schools
College and Career Readiness
Charter School Harbor Master Fund
NV Ready 21
NV Ready 21 WAN Incentive
Underperforming Schools Turnaround
The Balanced Plan for Growth holds most decision units within the Nevada System of Higher Education harmless at FY15 levels, including all support to undergraduate programs at the University of Nevada and the University of Nevada, Las Vegas as well as community colleges. In fact, support for Western Nevada College increases by $5.0 million over the governor’s recommendations, while support for Great Basin College increases $5.5 million over the governor’s recommendations. The Plan also retains the governor’s recommendation to fund a new medical school at the University of Nevada, Las Vegas.
In all, the Balanced Plan recommends $992 million for the support of public higher education during the 2015-2017 biennium. This figure is substantially larger than Gov. Sandoval’s recommended budget for the 2011-2013 biennium of $742 million, and it would even represent an increase over the legislatively approved budget for the 2013-2015 biennium of $971 million.
Health and Human Services
Enrollments in federal entitlement programs such as Medicaid, Temporary Assistance to Needy Families, and the Supplemental Nutrition Assistance Program continue to increase six years after the end of economic recession. Although federal funds support most of these programs, entitlements continue to be a key driver in state budgets.
Medicaid, in particular, has grown to become the second largest expenditure in the Nevada state budget. Although eligibility expansion has more highly leveraged the use of federal dollars to support the program, the number of Medicaid enrollments has nearly doubled from about 300,000 in early 2013 to almost 600,000 today. While much of the cost of Medicaid expansion is currently covered by increased federal funding, we need to plan ahead for the 2017-2019 biennium when this federal support will begin to decline.
The Balanced Plan for Growth meets Nevada’s current obligations to cover all eligible beneficiaries of Medicaid, consistent with the Governor’s recommendations. As one cost-control measure, the Balanced Plan proposes to hold provider reimbursements constant at current rates. This measure saves $60 million over the Governor’s recommendations for the 2015-2017 biennium.
The Balanced Plan for Growth is not dependent on any new revenue source and allows all expiring tax increases to expire as planned. To bridge the gap between the $6.92 billion in proposed spending and the $6.33 billion in available revenues, as projected by the Economic Forum, the Balanced Plan for Growth restores some previous or expiring measures and creates new, cost-saving innovations.
The Balanced Plan continues the prepayment of mining tax obligations that was first approved by the 76th (2011) Legislature, as well as the temporary elimination of health and industrial insurance premiums as deductions for the purposes of calculating liabilities under the Net Proceeds of Minerals tax. The continuation of these policies is expected to yield $31.0 million in FY16.
The Balanced Plan also proposes the closure of several smaller, nonessential programs and a sweeping of reserve accounts associated with those programs. This change is expected to yield $38.8 million over the 2015-2017 biennium.
In addition, the Balanced Plan reinstates a diversion of local property taxes to the general fund that began during the 2009-2011 biennium and was a part of Gov. Sandoval’s 2011-2013 Executive Budget. The Governor abandoned the policy in light of the Clean Water Coalition ruling, which determined that the State could not tax narrow constituencies in order to support general expenditures. That ruling, however, is inapplicable to this recommendation, because it would require all 17 counties to participate in the transfer. The transfer would be in the amount of 9-cent per $100 of assessed value, as proposed by Gov. Sandoval in the 2011-2013 Executive Budget. The Balanced Plan concurs with Gov. Sandoval’s assessment that the political subdivisions of this state are created for the purpose of helping the state carry out its obligations to citizens. This property tax diversion was estimated during committee hearings in 2011 to infuse $142 million into the General Fund. To ensure the estimate remains conservative, this figure has been retained for budgeting purposes although it is expected that property tax revenues will have increased since that time.
Finally, the Balanced Plan for Growth recognizes the growing strain that benefits for public employees have placed on public resources. It recommends that employer contributions for employee health insurance be held constant at FY14 rates. This change saves $6.9 million over the 2015-2017 biennium. Also, the Balanced Plan holds constant all employer contribution rates to the Public Employee Retirement System at the actuarially determined rates for FY15 (13.25 percent of pay for members in the Employee/Employer Paid plan). Any actuarially required increase beyond that rate will be covered by participants in the system. In addition, the Plan requires all employees of the political subdivisions of this state to contribute toward their retirement in an amount at least equal to the employer contribution. Any and all savings realized by any political subdivision as a result of these changes will be deposited into the Distributive School Account for disbursement to local school districts. These deposits will be offset by a reduced General Fund appropriation to the Distributive School Account in the same amount. Using very conservative assumptions, it is estimated that this change will generate $334 million for the Distributive School Account over the 2015-2017 biennium and that General Fund appropriations will be subsequently reduced by an equivalent amount.
|Economic Forum Projection||$3,069,593,035||$3,260,982,435|
|Property Tax Diversion (AB 543 – extended to all counties)||$71,000,000||$71,000,000|
|Mining deductions and pre-pay (extend AB 561 and SB 493 from 2011 through FY17)||$31,011,000||$0|
|Hold employer contributions to health ins constant||$9,828,628||$1,843,949|
[*] Program created by AB 378.
 Legislative Counsel Bureau, Fiscal Analysis Division, 2013 Appropriations Report.
 Legislative Counsel Bureau, Fiscal Analysis Division, 2011 Appropriations Report.
 Fund to be created by Assembly Bill 378.
 See, e.g., Matthew M. Chingos, “The False Promise of Class-Size Reduction,” The Brookings Institution, April 14, 2011, http://www.brookings.edu/research/papers/2011/04/14-class-size-chingos.
 These tax changes began with Assembly Bill 561 and Senate Bill 493 during the 76th Legislature.
 Created by Assembly Bill 543 of the 75th Legislature.