The opening session gavel hasn’t even dropped, but legislative Democrats are already questioning the governor’s office over an unbalanced budget proposal.
Staff for Republican Gov. Joe Lombardo presented his recommended budget to the Legislative Commission’s Budget Subcommittee on Tuesday in a hearing that covered amendments aimed at closing the budget deficit and early details on some of Lombardo’s legislative priorities.
The Legislative Counsel Bureau’s financial analysis division said Lombardo’s recommended budget as submitted to lawmakers ahead of Tuesday’s meeting – the first formal budget meeting for lawmakers of the biennium – contained a structural deficit of about $335 million.
Lombardo’s staff presented budget revisions to the 22-member committee, but said the revisions would still leave a $85 million deficit over the budget’s life, July 2025 to June 2027.
The proposed amendments had not yet been submitted to the Legislature, but Ryan Cherry, the governor’s chief of staff, told the committee that the governor’s office expects to submit proposed changes as well as look for other other possible amendments.
The Nevada Constitution requires the Legislature to pass a balanced budget. Lawmakers begin their 120-day session on Feb. 3.
“I cannot recall a time where a governor sent the legislature a budget that just simply didn’t add up,” Senate Majority Leader Nicole Cannizzaro, D-Las Vegas, said.
She asked the governor’s office to submit its amendments by 5 p.m. on Jan. 29.
A spokesperson for Lombardo attributed the lawmakers’ concerns to funding related to teacher pay raises and pre-K education. Elizabeth Ray said those expenditures were set up through one-time funding in the last legislative session and his new budget sets it up as ongoing operating expenses as part of his goal to make those policies permanent.
“The Governor hopes the Legislature shares his commitment to teachers and parents and will join him in making these expenditures permanent,” Ray said in a statement. “The executive budget remains balanced through one-time funding.”
The budget meeting comes less than a week after Lombardo’s State of the State address, where the governor emphasized fiscal discipline. In that speech, he said he “declined millions of dollars in state agency requests for more funding” to avoid putting stress on Nevadans.
Democrats on the panel took issue with the way the amended information was given to them: about a week after the first executive budget proposal was distributed, with planned revisions described only in the slideshow and staff comments — and still unbalanced.
Lawmakers spent more than two hours questioning Cherry, deputy chief of staff Debi Reynolds and finance director Tiffany Greenameyer — who was promoted into that role on the same day of the hearing – on the amendments they intend to make, as described during their presentation.
“We’re in a mile-long race and we’re half a mile in, and we’re going to change course?” Cannizzaro said.
Cherry told lawmakers he took full responsibility for the errors as the chief of staff, and said the roughly 30-person budget team in the Governor’s Finance Office was working to correct the deficit.
One issue the lawmakers had with the submitted executive budget proposal was the repeated allocation of one-time funding that had been approved during the 2023 legislative session. The governor’s staff said they will remove the allocations of $90 million for Campus for Hope homeless services project, $14 million in tax credits for the Major League Baseball stadium development, $5 million for wildlife crossings for the Nevada Department of Transportation and $11.6 million in collective bargaining agreements.
Lombardo’s legislative priorities
Lombardo’s staff also described some of the policy proposals in five priority bills Lombardo intends to introduce during the session. But because the bills haven’t been drafted, the scope of the budget’s structural deficit could change once the bills’ revenue and funding specifics are worked out.
The five bills focus on housing, healthcare access, education, public safety and economic development. They could cost $506.1 million, according to the executive budget overview. About $301.1 million would come from the general fund.
Each of those bills are expected to include new funds and programs not yet accounted for in the budget. In his housing proposal, Lombardo recommends establishing the Nevada Attainable Housing Fund. That fund would establish a loan program for housing projects between 60 and 150 percent of the area median household income, as well as offer grants or loans for rental assistance programs, land acquisition and other efforts.
In his education proposals, Lombardo proposed a permanent expansion of funding for teacher pay raises, including for charter school teachers, and pre-K programs. It also would establish the “Excellence in Education Fund,” which would reward high-performing teachers and administrators.
The “Safe Streets and Neighborhoods Act” would include funding “to hold habitual criminal offenders accountable,” and administer the programs in the bill, according to the finance office’s presentation.
Lombardo’s proposed legislation to address healthcare access would establish programs to address the healthcare workforce, including a study on the feasibility of developing or expanding academic medical centers in the state.
The lack of detail on the cost of each policy proposal led to multiple lines of questioning from Democrats, some of which the staff said they could not immediately answer. Republicans were mostly silent during the meeting.
For instance, Sen. Dina Neal, D-North Las Vegas, questioned how the governor wanted to pay for one of his proposals in his economic development bill, which is expected to cost around $124 million, according to the executive budget proposal. The “Nevada Forward: Economic Development Policy Reform Act” would establish a childcare facility infrastructure tax credit and a community infrastructure investment fund, the latter of which would allocate money to bring in roads, utilities and other relevant infrastructure for commercial projects or rural housing developments.
Neal said she wanted to see what other tools the state would use in conjunction with the fund.
“I think we need to examine how much we’re giving away if we’re not going to raise revenue,” Neal said. “And if we’re going to give something away, it should at least be for the social services in which we need to deliver for our citizens and not giving things to corporate future citizens who can actually pay for it themselves.”
Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.