Gov. Joe Lombardo has unveiled his long-awaited economic development proposal that would give up to $12 million in tax credits to child care facilities and offer abatements to businesses related to clean energy, advanced manufacturing and defense as the state tries to move away from its heavy dependence on tourism.

SB461, one of five policy bills that Lombardo will be bringing forward this session, also removes a requirement that businesses have a workforce diversity plan to be eligible for certain state grants.

Bankrolling these programs would require the use of state funds. The initial cost estimate from the governor’s office was $124 million across the next biennium — including $49 million from the state’s general fund — a hefty sum considering the state’s precarious financial position. The only program with a dollar amount attached to it was the one related to child care facilities, which sets a $12 million cap on annual credits provided.

The bill was formally introduced last Wednesday with little fanfare and no press conference. 

“This legislation positions Nevada as a leader in innovation and economic growth by addressing workforce development, infrastructure investment, environmental sustainability, new childcare tax credits, and industry diversification,” Elizabeth Ray, a spokesperson for Lombardo said in a statement. 

Its introduction came the day before the Economic Forum – a group of five private sector economists whose projections determine the size of the state budget — predicted that the state will bring in significantly less tax revenue than it expected across the upcoming two-year budget cycle, kicking off a series of potential budget cuts and likely death of legislation with price tags.

Lombardo in the past has cast the bill as an effort to diversify Nevada’s economy beyond the gaming and tourism industries, a longtime goal of state officials. These industries could be particularly affected by the Trump administration’s economic policies and consumers pulling back on discretionary spending — the state’s tourism industry has seen a significant downturn in travelers — and a more diverse economy would allow the state to better weather economic uncertainty.

It’s the first time Lombardo has used one of his five bills to focus on economic development, although tax abatements have been a larger part of Lombardo's platform. 

“We have to figure out ways that we can compete, and so we do that through incentives,” Lombardo said during a March speaking engagement at the National Automobile Museum. 

Below, we dive into the main provisions of the bill.

• Building child care facilities: The state would dole out up to $12 million in annual transferable tax credits for the creation or expansion of child care facilities.
  • GOED would oversee the program, determining recipients based on factors such as the facility’s feasibility and economic benefits, as well as its role in addressing child care shortages. 
  • The amount that a facility receives will be no more than 60 percent of operating costs. The credits will expire five years after their issuance.
  • Lombardo alluded to these tax credits in his State of the State speech in January: “Targeted tax credits for child care facilities, for example, help working families but also support businesses in building a stronger, more inclusive workforce,” he said.
    • The breaks could help build out Nevada’s inadequate child care system, which faces dire staffing shortages. More than 70 percent of kids in the state lack access to licensed child care as of 2023. 

• Abatements for high-tech businesses: The bill would carve out tax abatements to clean energy businesses, aerospace or defense technology companies, health care technology groups and manufacturing organizations, such as those related to electric batteries and robotics.
  • The standard amount of the deduction would be 10 percent of the business, property or local school support taxes. Businesses would be eligible for more deductions for providing higher wages, having a high share of employees who are Nevada residents or Nevada high school graduates, collaborating with state higher education institutions or providing housing assistance to their workers, among other factors.
    • Deductions would be capped at 60 percent of taxes owed in a single year, and could not exceed 90 percent when combined with other abatements.
  • To be eligible for the credits, businesses must operate in Nevada for the next decade and provide employees with health insurance and wages that are at least as high as the state’s average hourly wage.
  • Such deals have previously faced scrutiny. In 2023, after Tesla was given a $330 million tax break, lawmakers introduced legislation to curb the governor’s power in handing out tax abatements, but it ultimately failed and faced stiff opposition from industry. 
• Infrastructure funding: The measure establishes a program to help fund infrastructure projects and rural housing initiatives.
  • The initiative would prioritize programs that address a “eliminate infrastructure barriers,” ranging from a wastewater treatment facility to utility projects, and rural areas with a “critical housing need.”
• No diversity plans: Under existing state law, businesses must provide a diversity plan to be eligible for certain GOED grants aimed at defraying the costs of certain workforce recruitment and training programs. However, Lombardo’s bill would eliminate this requirement and replace it with a mandate for a workforce development plan.
  • The requirement was part of a workforce development bill that the Legislature passed during a special session in 2015.
  • The proposed removal also comes as diversity, equity and inclusion programs have been targeted since President Donald Trump took office.
• Building a talent pipeline: The bill would also incentivize “industry professionals” to pursue part-time teaching in career and technical education.
  • It would create a program that provides stipends to employers for the purpose of reimbursing employees for the time they spend teaching. The bill did not specify a specific dollar amount for this program.
  • Under the bill, school districts would be required to form "talent pipeline agreements" with local businesses to support internships and apprenticeships. 
• Promoting continuing education: It would also create a reimbursement program for people pursuing higher education in a trade-related field.
• New energy sources: This bill would also authorize partial abatements to businesses who work with biofuels, biomass or other fuels from recycled materials used in the production of energy or contributing to renewable energy.
  • The partial abatement would not be permitted to exceed 50 percent of the yearly taxes a business pays for property.