Nevada

State Fiscal Briefs

March 2020

Nevada’s budget basics

According to the National Association of State Budget Officers (NASBO), Nevada’s total expenditures in fiscal year (FY) 2019 were $14.8 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Nevada’s combined state and local direct general expenditures were $22.0 billion in FY 2017 (the most recent year census data were available), or $7,390 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,449.

Nevada’s largest spending areas per capita were elementary and secondary education ($1,558) and public welfare ($1,379). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Nevada’s combined state and local general revenues were $23.8 billion in FY 2017, or $8,002 per capita. National per capita general revenues were $9,573. Nevada does not levy an individual income tax or corporate income tax but does have a gross receipts tax. (Census counts this revenue as either general sales tax revenue or selective sales tax revenue.) After federal transfers, Nevada’s largest sources of per capita revenue were general sales taxes ($1,846) and charges ($1,134), such as state university tuition and highway tolls. Nevada also collects a relatively large amount of revenue from taxes related to gambling. Census categorizes much of this revenue as amusement tax revenue. In 2017, Nevada’s per capita amusement tax revenue was $309 while the nation’s was $26.

Nevada’s politics

Governor Steve Sisolak, a Democrat, was elected in 2018 with 49 percent of the vote. The next gubernatorial election is in 2022.

Democrats control both the Assembly (28 Democrats to 13 Republicans) and Senate (13 Democrats to 8 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Nevada. All Nevada Assembly seats are on the ballot in 2020 because members serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2020, and the other half will be up for election in 2022.

Nevada’s budget institutions, rules, and constraints

Nevada uses a biennial budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Nevada further limits both spending and revenue with a budget formula based on inflation and population growth. The rules are binding and require a legislative supermajority or vote of the people to override. A two-thirds supermajority is also required for all tax increases. The state also limits total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Nevada’s recent fiscal debates

  • In 2015, then-governor Brian Sandoval, a Republican, signed a historic” tax increase he pushed through the legislature as part of his plan to increase the state’s education spending. The tax package increased the state’s payroll tax—known as the modified business tax—and created a gross receipts tax. The payroll tax increase was set to expire, but 2019 legislation extended all the tax increases. However, the 2019 bill was passed with a simple majority, and Republicans are challenging the extension in court, claiming the legislation requires a two-thirds supermajority to pass.
  • Nevada voters approved legal and taxable marijuana sales in a 2016 ballot initiative. Nevada levies both a 10 percent tax on the retail price of marijuana and a 15 percent tax on the wholesale transaction between cultivators and distributors or retailers. Originally, the revenue from the 10 percent tax went to the state’s rainy-day fund while the revenue from the 15 percent tax went to education spending. But legislation passed in 2019 diverted the 10 percent tax revenue to the state’s education fund as well. Nevada collected $87 million in marijuana tax revenue in calendar year 2018.

Nevada’s current budget

Governor Steve Sisolak presented his proposed FY 2020–21 budget in January 2019. The budget emphasized education spending, including an increase to the state’s K–12 funding model, greater access to preschool, and more funds for career and technical education. In his 2019 state of the state address, Governor Sisolak also pledged $45 million in annual payments to the state’s rainy-day fund.

The legislature passed its budget in June 2019. The enacted budget generally followed the governor’s recommendations and included increases to the state’s education spending formula.

For more on Nevada’s budget, see