For years, educators have sounded alarm bells that per-pupil funding for Nevada schools trails far behind the national average of about $17,000 per student. 

Without upping the state’s funding by at least a third, advocacy groups warned that schools — which rank near the bottom nationwide — could risk even more overcrowding and teacher shortages. 

AJR1, sponsored by Assm. Natha Anderson (D-Sparks), would have done just that by tweaking the state’s property tax structure. It’s one of only two funding mechanisms — sales tax is the other — that a Legislature-commissioned panel of finance experts said is broad enough to get education funding close to the national average.

Instead of raising property taxes outright, AJR1 would have made a property ineligible for tax abatements the first year after it is sold, and revise the state’s tax code so that a property’s taxable value would reset when sold. 

The measure could have generated millions in additional funding for schools. An analysis of a near-identical 2017 measure found that it could have generated as much as a half-billion dollars annually for operating funds in about a decade. A 2024 report by the state’s school funding commission had similar findings.

But lawmakers were hesitant to pass the measure, even though they solicited the reports that suggested closing a $2.7 billion gap between current funding levels and national average funding target. It passed out of the Assembly on a 26-16 vote, but was never voted on in the Senate and died at deadline; a spokesperson for the Senate Democratic Caucus said that the measure did not have enough support to receive a floor vote. 

Its death is not totally unprecedented, echoing that of the 2017 measure (SJR14), which needed to pass two consecutive sessions. It died after it was not reconsidered in 2019. 

“We’ve obviously seen at least a version of that same idea come to the Legislature and never quite make it over the finish line. So I do believe we can have [a] more comprehensive conversation,” Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) told The Nevada Independent in an interview.

The legislation faced heavy pushback from the real estate industry and constituents who said it could inflate housing costs, which have risen more than 30 percent in Washoe and Clark counties since the pandemic. Even proponents said that tweaking the state’s property tax structure is a politically unsavvy move — it could rankle homeowners, who are more likely to vote than their counterparts who rent — and could very well threaten lawmakers’ shot at re-election if the measure passed. 

And critics say proponents didn’t do some of the take-no-prisoners maneuvering and cross-party dealmaking that pushed previous education funding hikes over the finish line.  

However, as a resolution, instead of a traditional bill, AJR1 only needed clearance from the Democrat-controlled Legislature and not Gov. Joe Lombardo — who has said he opposes new taxes. If it was approved a second time next session, it would have gone to voters in 2028 for final approval. That, too, could present issues for Democrats if it riled up anti-tax sentiment during an election cycle when they want to hold a key Senate seat and send the state’s electoral votes to a Democrat.

“The bill failed because it sounds like a tax increase,” said Mike Kazmierski, executive director of the educational nonprofit Strengthen our Communities. “No elected official wants to be associated with that third rail of politics.” 

Kazmierski and other proponents say that without AJR1 or something like it, Nevada schools will continue to trail behind. 

“The difficulty is property tax is messy and it's confusing and it's scary,” Anderson said in an interview with The Nevada Independent. “You want to handle it with dignity … I really did feel that I had done my job of doing that, but I had not.”

How is education funded in Nevada? 

Property tax is among the primary revenue sources for K-12 education funding nationwide. But the Commission on School Funding says its yield in Nevada has been constrained by abatements set during a hot housing market in 2005 — which limit annual increases in property tax bills for residential properties to 3 percent and 8 percent for commercial properties — and depreciation formulas, which reduce the taxable cost of real estate property over a period of time. 

Unlike other revenue sources, including mining and hotel room taxes, which can fluctuate depending on factors such as state of the economy, the commission said property tax is more stable and reliable. 

The commission, whose members include several school district chief financial officers, was created by the Legislature in 2019, and in 2021 was tasked with identifying optimal funding levels for Nevada's public schools and proposing a plan to achieve those levels within 10 years.

During the 2020-21 school year, Nevada’s per-pupil funding was in the bottom 10 out of 50 states, according to data from the U.S. Department of Education. 

For the past four years, the commission has recommended revamping property tax, along with sales tax, to resolve years of chronic education underfunding. Options are limited because Nevada lacks an income tax, which is used by other states to raise funding for schools. 

In 2023, lawmakers approved a historic increase in K-12 education funding, about $2.6 billion, enabled by an increase in projected tax revenues because of post-pandemic inflation. This brought funds going into the state’s Pupil-Centered Funding Plan up to $11.2 billion last biennium. 

Despite this increase, Nevada’s per-pupil funding, about $13,000 a year, remained about $4,000 behind the national average, according to the commission’s 2024 report. 

It’s not expected the funding appropriated for K-12 education this session will significantly move the needle as lawmakers were forced to tighten their purse strings because of an expected decrease in revenue from taxes, such as marijuana and room taxes, that support school funding. Lawmakers appropriated $11.5 billion for the next two years for the Pupil-Centered Funding Plan, which will bring Nevada’s average per-pupil funding near $14,000. 

Alexander Marks, a spokesperson for the Nevada State Education Association (NSEA), the statewide union for teachers and support staff that Anderson is a part of, said that AJR1 was the “best chance” to increase school funding. He juxtaposed it against the failed film tax credit expansion proposals from this session that would have given tax breaks to the industry, calling it a “contradiction between actions and words.”  

“The fact that it dies means that our students, families and educators are going to be stuck in an underfunded system for the foreseeable future,” Marks told The Nevada Independent. 

It's not just schools that were pushing for AJR1, but local governments, which are partly funded by property taxes. A City of Reno analysis found that if AJR1 was in effect, it would have helped the city bring in an additional $3 million off real estate sales during 2024 as it faces a multimillion-dollar budget deficit. 

The commission’s chair, Guy Hobbs, said no one expects Nevada’s school funding will reach optimal levels over a single session. 

He anticipates that in its next update, the commission will narrow down what policy changes lawmakers should consider implementing rather than providing them with a menu of options as it did in 2024. But he anticipates the commission will still continue centering on changes to property and sales taxes, even if they aren’t politically popular ideas.

“If there is a belief that there needs to be more investment in education, then we're going to need more money. That’s just the way it is, and we're going to need it from a sustainable source,” he said. 

Effect on real estate?

The bill faced strong opposition from the real estate industry, which argued AJR1 could have raised constitutional issues, going against an “equal and uniform” taxation provision codified in state law. 

This is in part because of the state’s depreciation formula, which reduces the taxable value of real estate at a rate of 1.5 percent annually over a 50-year period. This means that a home with a lower market value can have a significantly higher taxable value than a more upscale property, simply because of its age.

Dylan Shaver, a representative for the progressive group New Day Nevada that supported AJR1, offered two Northern Nevada properties as an example. One of them, a historic mansion, was listed for $2.4 million but was valued at $75,000 for property tax purposes. That’s in comparison to a newly built home listed for $550,000 with an assessed value of about $84,500. 

This means that homebuyers of less-expensive properties can end up paying significantly more in taxes.

“That depreciation ends up creating pretty significant holes and gaps at the local level that can not be resolved,” Shaver testified.  

Nevada is the only state to apply a depreciation formula to real estate, bill proponents point out. By resetting depreciation at the point of sale, advocates such as Shaver argue that the state’s tax system would not only become more fair, but could bring in more revenue. 

With the combined tweaks to depreciation formulas and abatements, the state could have brought in an additional $536 million annually in tax revenue by the 11th year, based on an analysis of the near-identical SJR14. 

But AJR1, by resetting depreciation at the point of sale, would make taxes “non-uniform,” so that owners of two homes of the same age and condition could be paying different tax costs, opening up the measure to potential legal challenges.

The real estate industry also pointed out that getting rid of abatements could significantly raise housing costs for buyers at a time when housing prices in Nevada have risen far faster than incomes. 

“If the property tax is also increased due to a depreciation reset, it would add hundreds or even thousands of dollars to their annual expenses, pricing many families out of homeownership,” Azim Jessa, a representative for Nevada Realtors, said during a May hearing. 

Although they remained opposed to the measure, the Nevada Realtors said in a statement that they understood the “need for adequate funding for schools” and that they “are willing to participate in policy discussions that result in reasonable solutions and are equitable and fair for homeowners and homebuyers alike.”

Political back-and-forth

The state’s most politically powerful educational advocacy group — the Clark County Education Association (CCEA), which often rivals NSEA and is not affiliated with the organization — also stood opposed. 

CCEA Executive Director John Vellardita said that although he supports the commission's recommendations, AJR1 was akin to a “political stunt.”

“I think what [NSEA] recommended requires building a coalition to support,” Vellardita said in an interview with The Indy. “At this point, there is no appetite of significant mass around that.”

To build that support, Vellardita recommended that proponents either push forth a non-binding ballot question asking voters how they would like K-12 education to be funded or a petition so they can directly decide on the law. Vellardita believes this could help take some of the political pressure off lawmakers. 

He also contended that NSEA didn’t have the political power to pull off a feat such as AJR1. CCEA, on the other hand, has clout as the recognized bargaining unit of teachers in the Clark County School District — the state’s largest.

“That's a heavy lift,” Vellardita said. 

CCEA has had success with Vellardita’s slow-burn strategy before. In 2021, the CCEA was able to strike a bipartisan compromise with lawmakers to pass AB495, a measure that would direct tax revenue from the mining industry toward schools, by qualifying several ballot measures with dramatic gaming and sales tax hikes as leverage, then rescinding them only when lawmakers passed the mining tax.

Anderson herself said that she could have done more constituent outreach to help the public understand AJR1, especially given that as an amendment to the state Constitution it would need to pass two consecutive sessions and then be approved by voters.

“It’s our voters. It’s our base. It’s even people that I am close to where I have to explain, ‘No that’s not what this does,’” Anderson said.

But even before it died, AJR1 already faced an uphill journey. During a Senate Legislative Operations and Elections Committee meeting, it passed “without recommendation,” a somewhat rare tactic used to pass bills that may not have the full support of the committee or require more consideration. 

But Hobbs said he sees value in the Legislature continuing to at least discuss the idea of property tax reform, even if these ideas make lawmakers and taxpayers uncomfortable. 

“It’s got to start somewhere,” he said. 

Although Anderson said she’s not sure yet if she’ll bring the measure back next session, she said that in the interim, she’ll continue to search for solutions.

“I know that we need to do something,” Anderson said. 

Eric Neugeboren contributed to this report.