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May 27, 2015

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Legislature 2013:

Last-minute budget negotiations become contentious in final legislative days

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Negotiations over Gov. Brian Sandoval’s $6.5 billion proposed budget entered into their final frenzied hours Friday as lawmakers rushed to put their own mark on the state’s two-year spending plan before the session officially adjourns Monday.

Democratic leaders have largely given up on most of their early priorities, namely $300 million in additional education funding, which would have required a significant tax increase.

That’s left them scrambling for a way to fund smaller priorities—chief among them the elimination of a 2.5 percent salary cut for state workers.

But even coming up with the $51 million to do that has proven to be a battle, as Gov. Brian Sandoval worked to eke out one last concession from Democrats—passage of his $5 million proposal to give tax credits to businesses who contribute to a scholarship program that low-income families could use to send their children to private school.

That’s a nonstarter for Democrats, who see it as a step toward a voucher program.

Republican sources said Sandoval is willing to reconsider his proposal to expand the exemption from the state payroll tax if Democrats would support his “opportunity scholarship.”

Foregoing that proposed tax cut would free up $25 million, enough to close the gap remaining on what Democrats want to do for state worker salaries.

Instead, of taking Sandoval up on the offer, however, Democrats have been combing the budget for areas from which they can divert funding.

“If he wanted to, he could just put that money toward education,” Sen. Debbie Smith, D-Sparks, chairwoman of the Senate Finance Committee, said of the tax cut. “If you don’t do a tax cut, you could do more for education. You could reduce more class sizes.”

But Smith acknowledged Democrats don’t have the votes to reject Sandoval’s tax cut outright. That would need a two-thirds majority to pass, requiring three Senate Republicans and one Assembly Republicans to join with the majority party.

Republicans in the Legislature are in lockstep with Sandoval and would vote against any attempt to eliminate the tax cut without movement on the governor’s other priorities.

“They would need to have two-thirds to get it out of there and I doubt that it would have that type of support,” Sandoval said Friday when asked if he would veto a budget that came over without the tax cut.

Because he has managed to keep Republican lawmakers unified, Sandoval has seen his budget go largely unchanged by Democrats, which puts him in a powerful bargaining position in the final days of session.

“The governor’s gotten everything else he wanted,” one Republican source said. “If they want more, they have to give on something big.”

But after a somewhat contentious Senate Finance Committee meeting, in which the panel endorsed a move to retain six furlough days of state workers but eliminate their salary cut, Smith indicated both sides are largely done with the arguing over the big-money items.

“Everyone has their personal priorities and ideas for how we spend the money we have,” she said. “We are left with extraordinarily difficult decisions.”

In addition to putting the finishing touches on the education budget, lawmakers still must decide whether to scrimp together about $6 million to help rural colleges weather a loss in funding resulting from a change in the way the state divvies up its higher education dollars.

Sen. Pete Goicoechea, R-Eureka, said this week he is prepared to vote against the budget if that money is not found.

In addition to the budget, lawmakers have three days to resolve some major policy issues. They include:

• A bill by Speaker Marilyn Kirkpatrick, D-North Las Vegas, to close loopholes in the live entertainment tax. Kirkpatrick backed down from her effort to tax all admissions and recreational activities, introducing a drastically paired down bill on Friday. It’s uncertain whether she’ll get enough support to pass the slimmer version.

• A bill that would require private party background checks on gun purchases. This has become the most political issue of the final days, with the national group Mayors Against Illegal Guns launching a concerted effort to see the bill passed. Sandoval has promised to veto the measure if it passes the Assembly.

• A measure that would stop the sales tax from applying to free meals casinos give their employees and patrons. The bill is part of an agreement to settle a $233 million lawsuit brought by the casinos.

• NV Energy’s measure that would require the utility to stop using coal to produce electricity and build natural gas and renewable energy plants instead is still winding its way through the Assembly. That measure is tied to negotiations on a cadre of renewable energy bills that have yet to be settled.

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