Democratic leadership and Gov. Joe Lombardo’s administration came to an agreement on all but one of the five major state budget implementation bills, with the measure funding state public works and construction faltering in the Senate in the final hours of the session and a special session on the horizon.

As part of the budget compromise, Democrats and Lombardo brokered a deal on three major Lombardo bills, including charter school legislation, a government modernization effort and criminal justice reforms — but all were substantially watered down from their original forms. 

As Lombardo’s pared-back priority bills advanced, lawmakers voted out SB511, a carbon copy of the Democrat-backed Appropriations Act vetoed by Lombardo last week. The governor signed SB511 late Monday night. 

But lawmakers failed to advance AB521, the Capital Improvement Program (CIP) — a budget bill that includes funding for more than $1.2 billion in executive branch capital improvement projects and $214 million in legislative branch capital projects. The measure is the only budget bill that requires a two-thirds majority vote to pass because it renews a property tax increase. 

A statement from Lombardo early Tuesday morning said a special session would likely come Tuesday.

“My office and I are conferring with legislative leadership this evening, and I anticipate calling a special legislative session in the morning," Lombardo said. "I will issue a proclamation to outline agenda items for the special session when finalized.”

Senate Republicans blocked the late Monday bid to pass AB521 over objections to the exclusion of charter schools from a handful of major education funding bills, citing their hopes for pay equity between traditional public school employees and charter employees, and capital funds for charter schools. They also pointed to their request for more medical residencies. 

"We are doubly resolved to stay here for as long as is necessary to correct this inequity," Senate Minority Leader Heidi Seevers Gansert (R-Reno) said on the floor. "I gave the majority a list of our priorities ... The majority's response to our list has been disregard, disdain, dismissal."

In a statement after the close of session, Assembly Speaker Steve Yeager (D-Las Vegas) called it “beyond disappointing that Legislative Republicans have once again put politics before policy and partisanship ahead of Nevadans.”

Throughout negotiations, education has again and again emerged as a key pain point. Though Lombardo had pushed for increases to Opportunity Scholarship funding as part of his school choice agenda, Democrats were unwilling to budge on the issue, compromising instead on funding for charter school transportation and allowing for more charter school sponsorship opportunities.

Separately, Democrats scrapped large parts of two other Lombardo-sponsored bills — SB431, a government modernization omnibus, and SB412, a major criminal justice bill — while still leaving some key Lombardo proposals intact. That includes an increase in the state’s Rainy Day Fund cap, and an increase in criminal penalties for drug crimes carried out with a firearm. 

The deal comes after Lombardo used the threat of his veto pen to pressure Democratic lawmakers — who fall one Senate seat short of a two-thirds supermajority needed to override any veto — into advancing several of his policy goals, including bills addressing school discipline and criminal justice.

Still, Democratic leaders held firm on a promise from last month that without a state budget approved they would not move on certain major policy bills, including a public financing measure related to the Oakland A’s relocation and a massive film tax credit expansion.

Late night votes spur budget chaos

With minutes left in the legislative session — and after more than a week stuck in procedural limbo — lawmakers in the Senate did not take up on a second vote on the CIP budget bill, after an initial vote on the bill failed with roughly a half-hour left in the day Monday.

Senate Republicans led by Seevers Gansert took a stand against the bill, calling for investments in charter school teacher pay through a bill appropriating $250 million for educator raises, capital improvements for charter schools and money for graduate medical education. 

In the final rush to sine die, a $17 million grant program for those programs, including residencies for medical students in Nevada, was zeroed out via an amendment. 

Education compromise leaves Opportunity Scholarships flat

Without any final deal struck on the issue, funding authorization for Opportunity Scholarships — a tax credit-funded school choice program available to a limited number of low- and middle-income families as a means to subsidize private school tuition, including private religious schools — will remain flat.

Lombardo’s flagship education bill, AB400, had contemplated boosting funding for those scholarships from $13 million to roughly $50 million, with a ramp-up to roughly $500 million by 2032. It also would have substantially lifted the income threshold to access those scholarships from 300 percent of the poverty line (roughly $80,000 per year for a family of four) to 500 percent (roughly $150,000 per year).

As designed, it would have been the largest expansion of a school choice program since 2017. It had also been pilloried by Democrats who called the proposal a non-starter. 

But the governor has faced increasing political pressure from his Republican base to increase school choice options, especially in the wake of Lombardo’s efforts on the campaign trail to cast himself as the “education governor.” His office also grew increasingly publically frustrated with legislative logjams, as marquee Lombardo policy bills stalled in key committees. 

As tensions spiraled into veto threats last month, AB400 only moved out of its initial committee on May 31, as part of a broader deal to advance a pair of budget bills, including the K-12 education budget, to the governor’s desk. 

As part of the deal, the bill was amended to kill two key school choice provisions: Opportunity Scholarships and a new Office of School Choice under his office. In exchange, Democrats agreed to preserve a Lombardo proposal that would reinstate a policy to hold back students who cannot read at grade level by the third grade, $140 million in funding for early childhood literacy and a policy that would explicitly allow cities and counties to sponsor charter schools. 

The bill was later amended again to include the ability for the Nevada State Public Charter School Authority to fund transportation to charter schools, another Lombardo priority. 

AB400, with the two amendments, was passed unanimously in both the Assembly and Senate. 

Lombardo’s crime bill whittled

Despite not receiving a hearing through the first 119 days of the session, lawmakers quickly advanced Lombardo’s omnibus crime bill (SB412) via a version amended through negotiations between Democratic leaders, the governor’s office and Sen. Melanie Scheible (D-Las Vegas), who chairs the Senate Judiciary Committee.

The amended version removes the vast majority of the original bill’s proposals to roll back recent Democrat-backed criminal justice reforms — including lowering the monetary threshold for what qualifies as felony theft and imposing stricter penalties for fentanyl possession. The version passed Monday with only hours left in the day included just five main provisions, including a revised definition of strangulation, increased penalties for drug crimes carried out with a firearm and a prohibition on early discharge from probation for those convicted of home invasion.

The bill also included $500,000 for the “Department of Public Safety to invest into machines that can test the quantity of fentanyl and fentanyl mixture,” Scheible said during a hearing of the bill Monday. 

Government modernization proposals pared back

In the final piece of Lombardo’s agenda to advance, the governor’s proposed government modernization bill (SB431) was heavily amended through the 11th hour on Monday to remove many of the bill’s most expansive proposals. 

That included the removal of a proposed cabinet for the executive branch (a policy Lombardo’s office abandoned as early as April), the reorganization and renaming of the Department of Employment, Training and Rehabilitation (DETR), language that would have limited the legislative Interim Finance Committee and the removal of a “Nevada Way” fund, housed within the state’s Rainy Day Fund, that would have been used to fund public-private partnerships. 

Provisions left in the bill included an agreement to lift a statutory cap on the Rainy Day Fund from 20 percent to 26 percent (itself a compromise, as Lombardo had sought a cap as high as 30 percent), the creation of a new office governing the state’s sprawling number of boards and commissions and the removal of a cap on state worker salaries at 95 percent of the governor’s salary (a provision that was already included in one of the three budget bills Lombardo signed in advance of sine die). 

SB431 was approved by both the Senate and Assembly unanimously with that amendment.

Updated at 6/6/2023 at 1:06 a.m. to include a statement from the governor.