Nevada lawmakers will have about $191 million less to work with than originally anticipated when creating the state’s upcoming two-year budget, a 1.6 percent reduction likely to set off a string of cuts and the death of many bills with a price tag.

A revenue forecast for the State Education Fund, obtained by The Nevada Independent, indicates a nearly $160 million decrease from previous projections — resulting in a total decrease of approximately $350 million.

The Economic Forum — a panel of five private-sector economists empowered to make the tax revenue projections that the governor and lawmakers must use in building their budget — estimated on Thursday that the state will bring in about $12.2 billion in revenue during the next two budget years. It marked a downturn from its December projection of $12.4 billion, a figure that Gov. Joe Lombardo used to craft his recommended budget (which initially came in hundreds of millions of dollars over that amount). 

It’s the first time since 2009 that projected revenue has decreased mid-session — forum members make their initial projections in December and an updated set at the start of May. Now, with just a month left before the Legislature adjourns, lawmakers will embark on a mad dash to ensure the state’s budget is not in the red. 

The decreased projection — widely expected and dreaded in the halls of the Legislature — is largely because of drops in expected revenues from the state’s sales and use tax, as well as the modified business (payroll) and commerce taxes. These downturns, which economists who spoke Thursday attributed to the Trump administration’s economic policies, were partly offset by estimated gains in insurance premium and property taxes.

The forum’s revenue projection did not include any potential shortfall to the state’s education budget, which is partially funded from local revenue sources.

However, a consensus forecast prepared by the Legislative Counsel Bureau’s fiscal division and the Governor’s Finance Office, and provided by Assembly Speaker Steve Yeager (D-Las Vegas) shows a nearly $160 million reduction in projected money toward the State Education Fund — leading to a total decrease of about $350 million.

In recent weeks, anticipating the pessimistic revenue estimates, the Legislature’s fiscal committees have rejected numerous requests for new positions and new programs included in Lombardo’s recommended budget. But so far, these reductions — which come out to about $130 million as of earlier this week — will not be enough to close the gap.

The budget crunch spells trouble for the more than 300 bills that are sitting in fiscal committees because of their potential financial impact. There’s pessimism in the building about the future of the film tax credit expansion proposals, among the most closely watched bills of the session, and many bills have already been amended to eliminate costs.

Lombardo, a Republican, also has five priority bills — three of which have not been formally introduced yet — that carry a significant price tag. Initial estimates showed that the proposals would cost the state upward of $500 million across the next two years, but those numbers were already factored into his recommended budget.

In a statement after the projection, Lombardo spokeswoman Elizabeth Ray called it “a manageable” shortfall that the state “will be able to mitigate.” She added that Nevada will be able to weather any budget shortfalls that may arise after the session ends with the state’s emergency fund.

“Nevadans can rest assured that the State is well-prepared to navigate moments of fiscal uncertainty, especially with the record amount of money in the Rainy Day Fund under Governor Lombardo’s leadership,” she said in the statement.

Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) told reporters Thursday that the priority for the rest of the session will be keeping existing programs and services in place. She raised concerns the Legislature will have to later convene for a special session to cut the budget, and she blamed the Trump administration for the shortfall.

“When you hear rhetoric and chaos and uncertainty, that is going to have an effect on people’s willingness to come here,” she said. “The more that people are not willing to come to Nevada … the less we’re going to be able to do here in state government to provide those services.”

In an interview with The Nevada Independent, Attorney General Aaron Ford — who is running for governor as a Democrat in 2026 — also laid the blame on the Trump administration for the projected drop in tax revenue, and he noted that the state projections come as Congress is discussing federal cuts that could further affect Nevada’s budget, nearly a third of which relies on federal funding.

“I’m angry because while Trump is handing out tax breaks to billionaires, it’s actually our teachers, firefighters, small business owners, our neighbors, our friends, our seniors,” Ford said. “They're the ones who are going to be paying the price.”

The revised estimates come amid warning signs for the state’s economy. At Thursday’s roughly six-hour hearing, economists said they expected a potentially strained labor force amid reduced immigration, modest gains in unemployment and decreased tourism because of the Trump administration’s trade policies, particularly from Canada, which makes up about 30 percent of the state’s international travel.

“We've seen some pretty dire numbers about vacation planning by Canadians to the United States,” said Emily Mandel, a senior economist with Moody’s Analytics. “[This] would have a noticeable, measurable impact on Nevada's tourism economy.”

Nevada’s economy is already showing some red flags — in the first 10 months of the current fiscal year, revenues are more than $100 million (about 3 percent) lower than at the same point last fiscal year, though that year also saw the Super Bowl and first Formula One race held in Las Vegas.

However, forecasters also acknowledged a high level of uncertainty because the long-term effects of the trade war and tariffs are unclear and could change at any moment. 

For example, Nevada is the state with the highest rate of Chinese imports in the nation, but those are heavily concentrated in the communications and electronics industries, said David Schmidt, the chief economist for the Nevada Department of Employment, Training and Rehabilitation. 

"The details matter enough that there's no certainty on how exactly to project," Schmidt said. “I don't know what tariff policy will be six months from now. If I don't know, then I don't have any really firm data to react to.”

Why is revenue dropping?

The biggest driver of the lower revenue projections was the state’s sales and use tax. The forum approved projections that are $102 million (2.7 percent) less than what it expected in December, driven by changes in the general economic outlook and consumer spending behaviors. The estimate was among the more conservative ones forum members could have selected.

“I tend to be more conservative in our forecast, given all the presentations that we have,” said forum member Michael Crome, who also works as the chief financial officer for the Las Vegas Raiders.

The next-largest cause of the projected revenue drops was the state’s modified business tax, which is assessed on payroll, because of lower-than-expected job growth. The state has seen roughly 0.5 percent growth in private employment during the past year — but growth was about five times higher last year.

The forum also projected a roughly $25 million decrease in the treasurer’s office’s interest earnings, which was because of lower forecasts and changes in the state’s accounting system that recently went live, said Steven Hale, the deputy treasurer for investments.

The state’s commerce tax (assessed on business revenue more than $4 million per fiscal year) is also supposed to bring in about $20 million less than what the forum expected in November, also in part because of the delays brought on by implementation of the new accounting system and the overall economic picture.

Forum projections also build off non-major revenue estimates made last week by the state’s Technical Advisory Committee on Future State Revenues. The committee expected a decrease of roughly $16 million in revenue each of the next two budget years for non-major revenues, which include fines and fees and the liquor tax.

Positive revenue projections

One piece of good news was related to the insurance premium tax, which is projected to have an increase of $46 million from the December forecast. Economists noted that, even in times of economic downturns, insurance premiums are often among the last costs that people stop paying.

Still, the forum adopted the most conservative projection.

“I would think we're almost guaranteed to get [the agreed upon] amount where, if we could go higher than that, then I think there's a risk that we will not achieve it,” forum member Marvin Leavitt said.

It also expected a roughly $7 million increase in revenues from the real property transfer tax.

The data on these tax revenues were better than expected in recent months, leading to increases in projected growth. However, the expected growth does begin to taper off by the end of the two-year projection in part because fewer people might be moving to Nevada from out of state amid general economic uncertainty.

Gaming, entertainment projections hold steady

There were few changes in the projections related to the live entertainment tax, as the forum remained optimistic that people would still travel for events covered under the tax, such as concerts, even if tourism decreases.

There were also no changes in the projections for gaming percentage fees — the forum maintained the projection made in its December meeting.

This story was updated at 6:30 p.m. on 5/2/25 to add reaction from elected officials and at 8:30 p.m. to reflect State Education Fund forecast.