By Jessica Hill and McKenna Ross, Las Vegas Review-Journal, May 5, 2025
Legislators learned last week that initial state revenue projections are short by about $191 million over the next two years — leaving many bills that carry a cost on the chopping block.
The estimated shortfall won’t be the last bad news lawmakers receive; the Economic Forum, which provides the binding revenue estimates, did not include a projection for the State Education Fund, which is expected to be declared short nearly $160 million.
During the next few, final weeks of the 2025 Legislature in Carson City, lawmakers will have to make some tough decisions on what’s most important.
“What we’re really doing is looking across the board to make sure that we’re spending the state’s dollars to best serve Nevadans,” said Assemblymember Shea Backus, D-Las Vegas, vice chair of the Assembly Ways and Means Committee. “And if we need to work really hard and grind it out, then that’s what we’re doing.”
Legislators’ financial challenges this session are in sharp contrast to the 2023 session, when the COVID-19 rebound and American Rescue Plan funds contributed to a windfall that boosted the biennium’s budget and helped fund new programs.
The Economic Forum predicted the state can expect to collect $12.24 billion in general fund revenue during the 2026-27 biennium. That’s up $203.5 million from the current 2024-25 biennium, but lower than the $12.43 billion that had been forecast in December. Nevada requires a balanced budget, meaning lawmakers can spend only what the state has available.
With the session’s finish line arriving in four weeks, what are lawmakers’ priorities? What bills can make it to the governor’s desk, and which ones will die?
Weighing what’s most important
Gov. Joe Lombardo, whose five priority bills also carry a hefty price tag, anticipated the state would be down in projected revenues. He said if there must be cuts, he and the Legislature will determine the “hierarchy of needs” and what areas are the most important.
For him, education is at the top, along with Medicare, Medicaid and health care, he said.
“I fully intend to ensure that education stays whole through this process,” Lombardo said during a recent press conference highlighting his education bill.
Lawmakers on both sides of the aisle have been adamant about ensuring essential services and programs remain in place and that positions are not cut.
Speaker Steve Yeager, D-Las Vegas, said in a statement that elected officials’ top priority is to protect the funding and services Nevadans rely on, especially public education and access to quality health care, housing and public safety.
Assembly Minority Leader Gregory Hafen, R-Pahrump, echoed those sentiments, saying legislators have been finding ways to save by not approving funds for new positions while ensuring employees are not laid off and programs are not cut.
“Obviously there’s some things that we still will need to appropriate money for, but the goal is to not have to lay off good employees and not have to cut essential services for our citizens,” Hafen said.
Nevada has always been efficient and has operated with the motto of “We do more with less,” Hafen said.
“We continue to try to strive to be that way and be as efficient as possible,” he said.
Following the Economic Forum’s projections last week, Lombardo’s spokesperson, Elizabeth Ray, said the state will be able to mitigate and balance the updated revenue projections.
“The Office of the Governor and Governor’s Finance Office will continue to work with the Legislature throughout the remainder of this session’s budgeting process,” Ray said in a statement.
She added that if any unexpected budget issues arise over the next two years, the state is well-prepared to navigate moments of fiscal uncertainty, noting the record $1.24 billion in the state’s Rainy Day Fund.
How bills are changing to reflect the shortfall
In a post-Forum press availability, state Senate Majority Leader Nicole Cannizzaro said bills with hefty fiscal notes will be subject to increased scrutiny.
“We are going to have to take a hard look at that and make a determination whether that’s something feasible for us to do,” Cannizzaro, D-Las Vegas, said Thursday. “I think our primary focus is going to be maintaining the services that we do have, making sure that we’re still delivering for Nevadans with all of the many things that we do here as a state.”
Even Cannizzaro’s proposals may face economic realities. Her education bill introduced Tuesday, Senate Bill 460, expands pre-K programs and early childhood literacy to children under age 6, regardless of their economic status, through grant funding. But the state would grant those funds “to the extent money is available,” according to the bill text.
Hafen said legislators are working to amend bills to reduce the fiscal impact — in some cases completely — considering the budget shortfalls.
Democrats may use the belt-tightening to limit Lombardo’s priorities. Cannizzaro said Thursday that funding private school vouchers, a long-time policy goal from the governor, is a non-starter in her view.
“Those are things that I don’t think we have even any resources now to be talking about those sorts of things,” she said.
Backers of some big-budget proposals say they continue pushing their bills despite changes to the general fund projections.
Sponsors of two bills that would expand the state’s film tax credit program to help finance a production studio in Southern Nevada, say their proposals — which could expand the available tax credits to either $98 million or $120 million annually — do not start until the 2028-29 biennium and would help the state’s economy in the short term through multi-million-dollar construction projects.
“Someone said to me, ‘I guess we’re not going to do the film bill.’ I go, ‘This is exactly why we need to do the film bill,’” said Sen. Roberta Lange, D-Las Vegas, sponsor of Senate Bill 220.
Assemblymember Daniele Monroe-Moreno, D-North Las Vegas and chair of the Ways and Means committee and co-sponsor of the Assembly version of the film tax credit expansion, said that bill and other exempt bills could be heard as soon as Thursday. Co-sponsor Sandra Jauregui said Assembly Bill 238 comes when the state needs economic diversification.
“The last time tourism slowed down, we together had to walk into this building and look at what we had to cut because we are dependent on one industry,” Jauregui, D-Las Vegas, said. “This is an opportunity for us to not have that happen again.”
Financial uncertainty in education
General fund revenues are not the only projected shortfalls; officials also have expressed concern about a shortfall to the State Education Fund, which was not included in the Economic Forum forecast.
May 2025 projections of the revenue for the State Education Fund show $161 million less than what was projected in January, according to documents obtained by the Review-Journal.
Approximately $8.8 billion was anticipated over the next biennium, but the new forecast estimates about $8.6 billion, though the numbers have not yet been finalized and could change. Cannizzaro said the forecast of the shortfall in the education fund is expected to be published this week or next.
A shortfall would signify that proposals to expand education spending might not come through, and that other funds might have to be shifted to ensure schools are funded to lawmakers’ and Lombardo’s satisfaction.
Less funding for education could pose a significant problem to both legislators and Lombardo, whose education bill calls for bonuses for high-performing teachers as well as a fund for parents to cover expenses for reading materials.
Ray, the spokesperson for Lombardo, said in a statement to the Review-Journal that with the final projections being determined Monday, the governor’s office will continue to work with the Legislature to determine how best to address the decreased revenue projections for the State Education Fund.
Backus, D-Las Vegas, said the Legislature will likely have to dip into the state’s approximately $845.7 million Education Stabilization Account to cover some shortages for fiscal year 2025, and it will have to make additional adjustments for the next two years.
After education is funded, the Legislature will have to ensure the state’s bills are paid, Backus said. Then, however much is left over could cover some of those additional bills that are on the table, she said. Backus added they’re not playing favorites between Democratic leadership and the governor, and that everybody has good ideas. It will take bipartisan work to find agreements, she said.
The financial issue is bigger than just a $191 million shortfall, Backus said.
Backus, Cannizzaro and other Democratic leaders have expressed concerns about the impact possible federal budget cuts could have on Nevada, because 28 percent of its budget relies on federal dollars.
“It creates a lot of chaos and instability,” Cannizzaro said.
A few months from now, legislators could be dragged back into a special session in which the governor must present a plan for what programs will stay and which ones will be cut, the Senate majority leader said.
Contact Jessica Hill at [email protected] and McKenna Ross at [email protected].