Democrats, Lombardo trade threats amid budget stalemate
Republican Gov. Joe Lombardo said Thursday he would not sign any bills implementing the state budget until his priorities are passed — setting up a clash with Democratic legislative leaders who rushed to pass the five major budget bills and said they would not move forward with several high-profile bills until the budget is approved.
“Before the Senate and Assembly take final action on these five bills today, tomorrow, or the next day, I suggest they reconsider their decision and delay final passage until the policy priorities that I spelled out on day one are on my desk,” Lombardo said in a statement issued fewer than 12 days before the Legislature adjourns. “If they choose to test my resolve, I’ll make it easy for them.”
Those priorities include a major expansion of a school choice scholarship program, implementation of school safety measures and repealing a substantial portion of Democrat-backed criminal justice reform laws — all of which have stalled or been declared dead-on-arrival by Democrats, who control comfortable majorities in each legislative chamber. In his statement, Lombardo did not list among his “day one priorities” his major elections bill, SB405, which Democrats have described as a “non starter.”
Lombardo’s statement comes in response to Assembly Speaker Steve Yeager (D-Las Vegas) and Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) saying Thursday that until the governor approves the state budget, they would not be passing any significant bills — including a public financing measure related to the Oakland A’s relocation, a massive film tax credit expansion and funding for a new school on the Duck Valley Indian Reservation, among others.
“If we get a budget veto, I don't know how we pass any of those bills,” Yeager told reporters Thursday. “Because we don't have a budget, we don't know how much money we have … If that veto happens, I don't know any other way forward. I think the bills are done at that point.”
In the face of the governor’s veto threat, Democratic lawmakers quickly moved the five major bills used to implement the state budget through the Legislature, seeking to get a budget approved, a chief responsibility of the lawmaking body, just days before sine die, the constitutionally mandated end of the 120-day legislative session on June 5. To do so, Democratic lawmakers introduced the budget bills a week and a half earlier than their anticipated introduction date of May 31.
If Lombardo rejects any of the budget bills, Democrats would need support from one Republican senator to override a veto because Democrats hold 13 of 21 Senate seats, one seat short of a two-thirds supermajority required to overcome a veto. Democrats hold a supermajority — 28 of 42 seats — in the Assembly.
If a state budget is not approved by June 5, lawmakers could be forced into a special session to fund the state government by July 1, the start of the next two-year budget period. Not approving a budget would mean leaving state government services unfunded and state employees without pay.
Cannizzaro also said that a potential special session would only be focused on passing a budget — not to discuss policy bills.
“I have been very clear and I believe we're all in agreement: We are not having a policy discussion in a special session,” she said. “We will hear the budget that we have, and if there are issues, I suppose we can talk about those. But we are not passing policy bills in a special session.”
Though Lombardo would issue the proclamation calling and setting the agenda for a special session, Cannizzaro said, “he does not control what bills are introduced,” adding that any bills would have to come from herself or Yeager.
The decision to fast-track budget bills this week drew opposition from Republican lawmakers, who cited concerns about the “fiscal responsibility” of the Democrat-backed budget. After introducing the bills Tuesday, lawmakers voted each measure out of its respective first house, with all but one (the Authorizations Act, a bill that largely allows for agencies to spend federal funds) passing along party-line votes with Republicans opposed.
The two sides have notably clashed over differing proposals for state employee pay, with Lombardo seeking larger quarterly bonuses for state workers, while Democratic lawmakers backed greater pay raises than those proposed by the governor, as well as changes to retirement contributions meant to increase take-home pay.
“No negotiations or even attempts to work with the governor were made. We support the budget as presented by the governor,” Assemblywoman Heidi Kasama (R-Las Vegas) said during a vote on one of the budget bills this week.
Yeager and Cannizzaro dismissed Republican opposition to the bills, pointing out that they were largely based on Lombardo’s proposed budget submitted to lawmakers at the start of the year.
“Does the budget include everything he wanted? No, of course not. Does it include some things we weren't thrilled about? Yes, of course, it does. Because that is the very definition of compromise,” Yeager said. “You give and you take, and you give and you take some more. These budgets reflect that process.”
Cannizzaro added that “the number one job of this body is to pass a budget that funds this state,” and the two leaders pointed to a similar comment from Lombardo’s Chief of Staff Ben Kieckhefer, who said during a May press briefing that “if zero policy bills pass, from either party, and we pass a budget that does that, we think it’d be a good outcome.”
The Democratic leaders also highlighted their own priorities in the state budget, including boosting education funding to a record level and increasing pay for state employees.
“How can we be responsible and fiscally responsible without making sure we can open up our schools on time, pay our state employees, have a state government that works? If we can't do that, I don’t think we can move these bills,” Yeager said. “But in the meantime, in these next four or five, six days, we'll continue to do our work.”
Partisan feud over K-12 spending continues
Democratic leaders also bristled at Republican-led criticism of major budget maneuvers that fueled $318 million in addition K-12 spending over and above the $2 billion recommended by Lombardo.
“I just never thought I would live in a world, in the state of Nevada, where we would be criticized for putting too much money into the public education system,” Yeager said. “I don't understand it.”
Among the major partisan friction points is a chunk of $291 million leftover in the state’s Education Stabilization Account, a kind of rainy day budget account specifically for education spending. State law limits that account to 15 percent of the State Education Fund, and higher-than-expected revenues in the 2023 fiscal year fueled this year’s unexpected excess.
Lombardo had sought to use that money as a one-time expense through AB400, an omnibus measure that also includes a massive expansion of school choice scholarships that has so far stalled in Democrat-led committees. As part of that bill, the $291 million would have been split in half as seed money for early childhood literacy programs and teacher pipeline scholarships, with the programs funded in future years with the interest payments on those accounts.
But a budget subcommittee voted early this month to ignore those proposals, instead sending the money back through the state’s main K-12 funding formula, the Pupil-Centered Funding Plan, a move that was backed at the time by all but one member of the subcommittee. That came in large part, Yeager said, because the committee did not believe interest payments could viably serve as a long-term funding source.
“We like those programs … these are great programs,” Yeager said. “It's not great to use a funding source that could dry up in the future. So we're going to start an early literacy program and then pull the rug out from under those kids a year in?”
But since that subcommittee vote, Republicans have uniformly voted as a bloc against the education budget, both in full committee votes and on the Senate floor. At issue, they have argued, is the creation of a “fiscal cliff” by the use of one-time dollars from the stabilization account for ongoing funding, in this case per-pupil funding, and the decision against funding Lombardo’s proposals.
“Right now our revenues are very strong, they continue to be strong, but we don’t quite know where we’re going to be,” Senate Minority Leader Heidi Seevers Gansert (R-Reno) said during a floor debate over the K-12 budget bill on Wednesday.
But at Thursday’s press conference, both Yeager and Cannizzaro bristled at the suggestion that the appropriations would create a fiscal cliff. Cannizzaro, in particular, called the argument “cover” for the governor to veto the K-12 budget despite the spending increases called for in his initial budget recommendations.
“This is not a fiscal cliff,” Cannizzaro said. “This is not ‘one-time money’ that is not going to help our students. This is revenue to the state of Nevada that flows to the Pupil-Centered Funding Plan to help to support an increase in per-pupil funding. Period.”
More broadly, Democrats did not appear eager to advance on one of Lombardo’s biggest priorities: school choice.
AB400 — among a dozen other major proposals — would drastically increase the size and availability of Opportunity Scholarships, tax credit-funded non-academic scholarships that partially subsidize the cost of private school tuition for low- and middle-income Nevada families. Under current law, the tax credit funding is capped around $13.2 million per biennium. Under AB400, that number surges to $50 million by the next biennium, and could increase as much as $500 million by the end of 2032.
On Thursday, Yeager again reiterated that leaving Opportunity Scholarship funding flat in the next two fiscal years was the Democratic compromise position, arguing — as he did earlier this month — that his caucus could have moved to zero out the program altogether.
More than that, Yeager explicitly called for such negotiations to come at a future session — and not within the next 11 days.
“But in the spirit of compromise, in the spirit of negotiations and the ones we just had in 2021, we left [Opportunity Scholarships] as they are,” Yeager said. “Is there a discussion for a future session about whether that number is right, whether these programs work, whether we're going to hold private and religious schools accountable? Yes, that's a discussion for another session.”