Gov. Joe Lombardo in his second State of the State address announced plans to make pay raises for teachers permanent, split the state’s health care agency, get tougher on crime and help develop $1 billion in attainable housing units.

In the roughly 45-minute speech on Wednesday, he also announced details on his proposed two-year, $12.7 billion budget — a 9 percent increase from the last budget — and touted the state’s growing workforce, his success in helping pass a voter ID ballot measure and a record-high reserve fund of $1.3 billion.

Speaking to members of Nevada’s Assembly and Senate two weeks before the start of the state’s 120-day legislative session, Lombardo offered conciliatory messages aimed at Democrats, who hold sizable majorities in both legislative chambers, saying he was “proud to collaborate with the Legislature last session,” (though the Republican governor set a single-session record in vetoing 75 bills) and noting areas where he thought there was bipartisan consensus.

“It’s no secret that in the coming months, we won’t always see eye to eye on everything and that’s OK,” Lombardo said. “What I do know, however, is that there will be absolutely no disagreement among us on two essential mandates: fulfilling the people’s trust and giving them nothing less than our very best.”

The political stakes are high during the next four months ahead of Lombardo’s planned re-election in 2026. Democrats have already begun attacking the governor, highlighting his 2023 vetoes of pro-tenant legislation and a bill that would have provided universal free meals to K-12 students.

The speech still attracted some moments of bipartisan applause. Democrats and Republicans cheered when Lombardo pitched splitting the health agency and making teacher raises permanent, but Democrats were silent when the governor touted denying certain agencies’ funding requests in the name of fiscal responsibility and proposed stricter rules for felony charges.

In a press gaggle after the speech, Lombardo said he believes he’ll be able to work with Democratic legislators, saying “as a group, I believe we have the ability to move forward.”

In a response after the address, Assembly Speaker Steve Yeager (D-Las Vegas) and Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) said they appreciated Lombardo’s willingness to work across the aisle, but they didn’t yet have enough details to fully weigh in on his proposals.

Cannizzaro and Yeager said they suspect Lombardo’s proposed budget was unbalanced and calls for more expenditures than revenue supports.

“Obviously, that's really concerning,” Yeager said. “You can't spend money that you don't have.”

Below are five takeaways from Lombardo’s speech.

Permanent teacher raises and open zoning for schools

Lombardo proposed making funding for teacher pay raises approved two years ago permanent and extending those pay raises to all charter school teachers. 

It ends uncertainty about a $250 million matching fund approved in the 2023 legislative session that resulted in raises for teachers and school staff as large as 20 percent across the state. The matching fund is set to expire after two years, raising questions about whether the raises would sunset too, and excludes charter school teachers.

His proposal sets up a conflict with legislation proposed last month by Cannizzaro to renew the raises for another biennium, and once again exclude charter school teachers. 

“Any dollars that are spent, whether they are for charter schools, are there for public schools, or we are talking about opportunity scholarships, have to come with accountability measures,”  Cannizzaro said. 

Lombardo also reupped an idea he unsuccessfully proposed last session for open enrollment policies that allow students to go to a school outside of the public school they are assigned based on their address and provide transportation to that school. 

“My view is … no child should be trapped in a failing school because of their ZIP code or held down because of how much their parents or grandparents earn,” he said. 

School districts including in Clark and Washoe counties already allow students to apply to go to the school of their choice, provided there’s available capacity, but don’t offer transportation to the new school. 

Lombardo also promised legislation that would impose stricter accountability policies and accelerate improvement in schools. 

“I mentioned teachers and administrators,” he told reporters after the speech. “They need to be responsible for the performance of the kids that they're responsible for. Could that mean removal from the system? Absolutely.”

Notably, Lombardo did not mention the state’s Opportunity Scholarship program in his speech. The program provides need-based scholarships for students to attend private schools, and has been a political flashpoint for a decade. 

Lombardo confirmed to reporters that he intends to include a proposal similar to Opportunity Scholarships in his education bill.

“It may be rebranded, but it will be present,” he said.

Splitting up health care department

One of the most dramatic changes proposed by Lombardo is to split the state’s second-largest agency, the Department of Health and Human Services, into two separate entities. 

Lombardo said Medicaid (the government-funded health insurance program primarily serving low-income people), the state’s health insurance exchange and state employee benefits program would fall under a new entity called the Nevada Health Authority.

“This new authority will capitalize on the broad and strong purchasing power of the state when it comes to health insurance,” Lombardo said. 

The agency will also include a proposed Office of Mental Health to help expand access to behavioral health services and ensure better care coordination. Nevada Medicaid Executive Director Stacie Weeks will head the Nevada Health Authority, Lombardo said.

It comes on the heels of the state’s agreement with the Department of Justice to address Nevada’s inadequate network of supportive behavioral health services (such as therapy and crisis support) that often led to kids being institutionalized in facilities away from their families. 

Advocates and experts have said that the state needs an overarching entity to coordinate services and ensure families receive necessary care.

Yeager said the plan sounds good, but “the devil is in the details.” 

“How do we do that?” Yeager asked. “[The Department of Health and Human Services] is a gigantic bureaucracy. And not only that, there’s a federal component. All the Medicaid stuff is federal funding.”

Lombardo also promised legislation that would require all health insurance plans to adopt standardized and digitized prior authorization plans to reduce approval delays for patients and providers. He also said the legislation would propose expanding graduate medical education and offering incentives for providers working in underserved communities.

Crime and diversion courts

Lombardo vowed legislation to reduce the dollar amount at which a theft is considered a felony, increase penalties for repeat offenders and reduce the quantity of drugs a defendant is required to have to trigger drug trafficking charges.

“Imagine a world where California is tougher on criminals than Nevada,” he said, referring to the state’s recently passed ballot initiative raising felony theft thresholds to combat shoplifting. “That’s the reality we face today.”

But Lombardo contends his most notable proposal will be prohibiting the use of diversion courts — criminal justice programs that allow defendants to avoid jail time and a criminal record by completing a treatment program — for offenders who commit crimes against children and the elderly.

Such courts have been demonstrated to reduce recidivism rates and improve community safety. Nevada has several diversion programs, including for DUI offenders, those facing evictions, and defendants diagnosed with substance use disorders.

His call to raise drug trafficking thresholds comes after lawmakers in 2023 set a new floor for how much fentanyl qualifies as trafficking at 28 grams, down from the previous threshold of 100 grams.

Violent crime in Nevada has dipped by 15 percent from 2023 to 2024, with the number of murders sliding from 230 to 171, according to state data. Still, Nevada’s violent crime rate slightly outpaces the national average. 

During his speech, Lombardo slammed previous legislation that he said reduced penalties for drug possession and distribution, such as 2019’s AB236, which aimed to curb the growth of the prison population.

Such policies “tied the hands of prosecutors” and “restricted justice for the victims of crime,” he said. 

Housing and economic priorities

As housing costs stretch pocketbooks, Lombardo identified the federal government’s unwillingness to release more public land as the root cause. More than 85 percent of the state’s land area is owned and managed by the federal government.

Lombardo said he has “great confidence” in President-elect Donald Trump and Nevada’s congressional delegation to free up federal land for housing, but said he would introduce legislation to further push the envelope on development.

The governor said the act will aim to streamline permits, prioritize the use of buildable land for Nevadans and not for out-of-state investors, and support the creation of $1 billion in new attainable housing units across the state. He said he wants to see public-private partnerships and suggested prioritizing first responders, teachers and nurses for new housing units. 

Lombardo said after the speech that a portion of the housing spending would be provided by the state and other dollars would come through the state infrastructure bank, low-interest loans and bonding capacity.

Asked whether he would reconsider any of the housing bills he vetoed in the 2023 session, Lombardo said “everything is always under consideration” but reiterated that he does not support rent control.

Lombardo vetoed a bill last session that would have changed the state’s unique summary eviction process, which requires tenants make the first filing in any eviction legal proceeding. But he said he was “open to consideration” of something similar this year. 

Yeager said conversations about tenants were noticeably absent from Lombardo’s speech.

“We have a lot of renters in this town,” he said. “And we have the fastest, most unique, most messed up summary eviction process in the country … We need to do … more than land, more than building to help people that are in places now, not get evicted.”

As fires have ravaged Southern California and insurers canceled wildfire coverage before the fires, Lombardo said it’s important to ensure that homeowners and residents have “adequate insurance in place” but didn’t offer further details on how policymakers might achieve that.

Lombardo also pledged to modernize the state’s tax incentive and abatement program, saying it should support clean energy, health care and child care

The governor also promised to build on 2023 legislation by reviewing and assessing the state’s more than 300 boards and commissions.

Counting all votes on Election Day

Lombardo called for requiring all mail ballots to be counted by the end of Election Day — an idea he also unsuccessfully proposed last session. 

Nevada law currently allows for mail ballots postmarked by Election Day to be received by 5 p.m. four days after Election Day, which Lombardo said Wednesday makes “zero sense.”

In the 2024 general election, about 2.1 percent of mail ballots cast in Clark County and 1.8 percent of Washoe County mail ballots were received after Election Day, according to data from the secretary of state’s office. These nearly 12,000 ballots made up less than 1 percent of the total ballots cast in the state’s two largest counties.

There is an appetite from Nevada Secretary of State Cisco Aguilar, a Democrat, to accelerate ballot counting, but he has opposed changing the deadline to receive mail ballots. The secretary of state’s office said after Lombardo’s address that Aguilar looked forward to working with him on “a data-based solution that maintains the robust access to the ballot box that Nevadans expect and enjoy."

Lombardo said Wednesday that he hopes to work with Aguilar, but that he would be open to taking these proposals to the ballot.

“I hope that this is one of the first bipartisan bills I sign,” Lombardo said. “Honestly, I’d prefer not to go to the ballot on this issue, but if the Legislature chooses not to pass it, I’ll again lead an effort to take it to the voters and ask them to decide.”

Cannizzaro expressed skepticism about Lombardo’s proposal to change the mail ballot deadlines.

“I do not believe that the answer is telling some Nevada that their vote, despite it being within the balance of the law, can't be counted because, for some reason, it didn't make it to the clerk's office by Election Day,” she said.