Sandoval unveils budget with $1.1 billion tax hike, more Zoom Schools, full-day kindergarten


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CARSON CITY, Nevada — Gov. Brian Sandoval unveiled a budget with sweeping tax increases less than two weeks after calling for leadership, vision and courage to push Nevada to new heights.

Passing it won't be easy in a state where 79 percent of voters recently rejected a margins tax to fund education, but the governor — who has high popularity ratings and Republican allies heading the Legislature and all constitutional offices — may be in the unique position to do it.

His budget includes:


Sandoval is asking the Legislature to pass a package of taxes that would bring Nevada more than $1.1 billion in new revenue over the next two years, for a total budget of $7.3 billion. That's up from the current budget of $6.6 billion.

The proposal calls for restructuring the flat, $200-a-year business license fee into a fee that varies based on a company's gross receipts and industry type. It would be added on top of the Modified Business Tax, also known as the payroll tax. The new fee is expected to generate $438 million over two years.

Other plans include raising the cigarette tax from 80 cents to $1.20 per pack, changing the way slot machines are taxed, and raising the mining industry's payroll tax rate to 2 percent. That would put it on par with banks, rather than general businesses that have a 1.17 percent payroll tax.

He's also asking for a permanent extension of temporary "sunset" taxes set to expire June 30. Those include higher payroll taxes, a 0.35 percentage point sales tax increase and a $100 annual increase in the business license fee. That would raise an estimated $580 million over the next two years.

He'll need support from two-thirds of the Republican-controlled Legislature to pass any taxes. Democrats and moderate Republicans are likely to back to measures, but he could face trouble if enough of the most conservative Republicans unite to oppose the plan.

The state expects to start the fiscal year in July about $170 million behind where it needs to be. With mining and gambling tax revenues falling short of expectations even in the midst of economic recovery, Nevada is expected to take in $6.3 billion in the next two years.

The lackluster projections prompted Gov. Sandoval to suggest fundamental changes in Nevada's tax plan.

"Current job, economic and population growth has revealed a disconnect between our evolving economy and the current revenue structure for the state," he said in a budget memo. "This must change."


Sandoval plans to inject $782 million more into K-12 schools compared with the current two-year budget. That includes $352 million more for general education funding, and $430 million for targeted education programs.

His budget calls for $100 million for Zoom Schools, which provide extra resources to schools with a high number of English Language Learners. That's double the amount from two years ago, and would raise the number of Zoom Schools from 24 to 48.

He'd like to add a new category of schools with extra funding: Victory Schools, or those with a high percentage of students in poverty. His proposal calls for $50 million to launch the program.

Sandoval wants to add $68 million to the budget to expand full-day kindergarten statewide. The existing scheme includes a mix of free full-day kindergarten, half-day programs and tuition-based full-day programs.

To address bullying, Sandoval's budget calls for $36 million to bring social workers into schools. And to ensure that children are reading by third grade, he calls for $27 million in literacy funding.


The governor also proposed ending furloughs for state employees, which were implemented during the recession.

His budget calls for increased funding for the treatment of autism, and funding to launch a new medical school at the University of Nevada, Las Vegas and for the Hotel College at UNLV.

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