Optimistic Sandoval touts budget, Nevada’s prospects; Democrats say agenda falls short

By David McGrath Schwartz

Published Wednesday, Jan. 16, 2013 | 6:45 p.m.

Updated Wednesday, Jan. 16, 2013 | 9:22 p.m.

Gov. Brian Sandoval struck a moderate and optimistic tone in his second State of the State speech on Wednesday night, as he presented a $17.6 billion proposed budget for the next two years to the 2013 Legislature.

In his address, which may have telegraphed themes of his expected 2014 re-election campaign, Sandoval emphasized the progress Nevada has made over the past two years since he was elected- 30,000 jobs created, more than halfway to the 50,000 jobs he has committed to creating.

“The last two years have been a success story, not fully realized, but undeniably on track,” he said. “I can confidently report to the people of Nevada that the state of our state grows stronger every day.”

His budget and speech had a little something for everyone -- conservatives and liberals, education advocates and school reformers. He wants to expand full day kindergarten, but also allow school choice. He highlighted his expansion of Medicaid, but also wants the recipients to make co-pays.

Viewed charitably, allies will describe the speech as furthering his reputation as a center-right but pragmatic governor, not known to take on one sweeping challenge but looking to change policies at the edges. Viewed critically, it could be seen as expedient short-term politics to get himself re-elected in 2014, as he tries to appease all sides without a confrontation.

“In this budget, we’ve reduced the tax burden on local businesses, we’ve addressed increasing caseloads and we’ve begun to diversify our economy,” he said. “The social service net is stronger. Support for education is increased. And Nevadans will continue to benefit from the over-arching policy of this administration throughout this economic downturn - that is, we cannot cut our way out, we cannot tax our way out, we can only grow our way out.”

Sandoval has already taken most of the potential partisan thunder out of the Legislative session, by agreeing to extend about $650 million in taxes that would otherwise expire and agreeing to expand Medicaid to provide health insurance for more low-income Nevadans.

In his speech, Sandoval embraced that portion of the Affordable Care Act, noting 78,000 Nevadans will be covered and 8,000 new health care jobs will be created as the federal government injects “over half a billion dollars into our state’s economy” to pay for the expansion.

But he also emphasized that he would seek to reduce payroll taxes on businesses.

“Let me be clear - Nevada’s employers cannot afford higher taxes, and I will not support them,” he said.

He called for those on Medicaid to pay a small amount in co-pays.

But not all his ideas will be embraced.

In the Democratic response, Senate Majority Leader Mo Denis, D-Las Vegas, said Sandoval’s agenda falls short of addressing the persistent problems plaguing the state, calling on him to be more aggressive with education funding and restoring pay and benefit cuts sustained by state workers over the past four years.

“Gov. Sandoval’s proposed ‘modest’ increase in education spending from last year is not sufficient to make up the hundreds of millions of cuts that have been made over the last four years,” Denis said. “This is unacceptable, not just to our current students but to the future of our state.”

Democratic leaders questioned why he was cutting taxes for business when the state doesn’t adequately fund education, and why he was depleting the state’s rainy day fund.

“Why in the world would we cut the (payroll tax) when we can’t properly fund schools,” said Sen. Debbie Smith, D-Sparks, and incoming chair of the Senate Finance Committee. "Why would we eliminate the rainy day fund when we’re not in a crisis? That money is supposed to be for an emergency.”

But Republicans applauded the speech and his position on extending most of the taxes - which two years ago, a majority of Senate Republicans voted against.

"I think Nevadans of every stripe should be happy with this speech and with this budget," Senate Minority Leader Michael Roberson, R-Las Vegas, said.

Assembly Minority Leader Pat Hickey, R-Reno said: "I think he hit all the bases, but whether it was a home run, I don't know," noting that the Legislature will further decide what should be prioritized.

Sandoval also promised to increase funding for English language learners, putting $10 million in a “knowledge fund” for higher education and earmarking money for the Millenium Scholarship, to extend it until 2018.

Sandoval painted a bleak picture of the situation when he took office, with the state leading the nation in unemployment, foreclosures and personal bankruptcies. The state faced budget cuts “in every category.”

Sandoval cast the 2011 Legislative session as one where “we were able to work together to craft bipartisan compromise” and set the stage for the state’s current progress.

He said his last appearance was “preceded by a period of decline.” But on Wednesday, he argued “my appearance before you tonight has been preceded by a period of growth - yes, growth.”

The general fund portion of the state budget, which does not include federal dollars, represents a “modest increase” over his last budget.

A sky-rocketing caseload growth in health and human services is mostly responsible for the added spending, he said. But he emphasized his proposal to spend more money on education.

“My commitment to K-12 education has also increased spending for our schools,” he said. “But we must only allow for growth that our fragile economic recovery can bear.”

Denis struck a mostly deferential tone in his response, praising the governor for his integrity and commitment to work with others.

But Denis saved his harshest criticism for Sandoval’s social safety net funding.

“The governor’s policies have been devastating to families with children with autism or mental and physical disabilities,” Denis said. “Senior citizens have seen their services cut as well.

“We cannot provide the services necessary for our vulnerable populations if we do not adequately fund social services.”

Denis said Democrats will begin rolling out an agenda to “build a better Nevada.”

But while Denis accused Sandoval of “promising the world,” he stopped short of providing any insight into how Democrats would propose funding their major policy initiatives.

He did, however, tick off a list of Nevadans that he said could not foot the bill for the initiatives.

“We cannot implement these plans on the backs of the middle class,” he said. “Nor can we ask tourists and our resort industry to pay more for these investments. We cannot ask our small businesses to stretch resources any further.”

Anjeanette Damon contributed to this story.