Legislative Report for 4/5/2025
Source is Nevada Economic Forum, this is an AI generated summary of the report:
On May 1st, 2025, the Nevada Economic Forum released updated revenue projections for the upcoming 2025-2027 biennial budget, which the legislature will use to finalize the state budget. Here’s a breakdown of the fiscal analysis as of that date:
Key Findings:
- Lower Revenue Projections: The Economic Forum projected approximately $191 million less in general fund revenue for the next two-year budget cycle compared to their previous forecast in December 2024. This represents a 1.6 percent reduction.
- Significant Impact on Education Funding: The State Education Fund is expected to see a decrease of nearly $160 million from prior projections. This contributes to a total decrease of approximately $350 million in anticipated state funds.
- Reasons for Downgrade: Economists cited concerns about a potential economic slowdown due to the Trump administration’s trade policies, particularly impacting tourism from Canada, as well as a potentially strained labor force amid reduced immigration and modest gains in unemployment.
- Sales Tax Decline: A significant portion of the lower revenue projection is attributed to a decrease in sales tax revenue, which was down 3.2 percent compared to the same point last year.
- Impact on Budgeting: The reduced revenue forecast is expected to lead to budget cuts and could result in the failure of legislative bills with significant price tags.
- Education Funding Concerns: The substantial drop in projected education funding raises questions about potential expansions to education programs in the coming biennium. Governor Lombardo’s proposed budget had relatively flat per-pupil funding for the next fiscal year, with a slight increase in FY 2027, but this new forecast puts further pressure on education funding.
- Increased Unemployment Forecast: The Governor’s Finance Office projects that the state’s unemployment rate will rise from 5.69% to 6.55% in the next fiscal year before slightly recovering.
- Decline in Tourism: Visitor volume is also expected to decrease by 4.4% in FY 2026 before a slight rebound in the following year.
Legislative Activity:
- Legislative budget committees had been working to close budgets in anticipation of the Economic Forum’s May 1st projections.
- There were disparities between the Governor’s recommendations and legislative proposals in certain areas, such as funding for the Nevada Knowledge Account.
Overall Outlook:
The fiscal analysis released on May 1st, 2025, paints a concerning picture for Nevada’s upcoming budget cycle. The lower revenue projections, driven by economic uncertainty and declining sales tax, will likely force lawmakers to make difficult decisions regarding budget allocations and potentially scale back or eliminate some planned initiatives. The significant shortfall in projected education funding is a particular area of concern.
It’s important to note that the May 1st forecast from the Economic Forum is the final official revenue estimate that the Legislature must use to balance the budget for the next two fiscal years (2025-2027
Nevada State Democratic Party spokesperson Tai Sims:
“In an economy that is already struggling under Joe Lombardo, Donald Trump’s reckless tariffs and Elon Musk’s erratic DOGE cuts are devastating working families’ budgets, harming businesses, and forcing the state to contend with sharp declines in revenue projections. With Lombardo’s encouragement, Trump’s reckless tariffs and economic policies are going to force painful budget decisions on the state all the while costing Nevadans jobs and leading to higher costs and less money in people’s pockets.”
Senate Majority Leader Nicole Cannizzaro released the following statement after the Legislature’s Economic Forum projected a nearly $200 million drop in state general fund revenues over the next two years. Economists said that the drop in revenue is a direct result of the damage that the Trump administration’s chaotic economic and trade policies are doing to Nevada’s economy. Today’s projections reflect changes in economic circumstances since the Economic Forum last met in December 2024.
“The Trump administration’s reckless economic policies are damaging Nevada’s economy, leaving us with a new $200 million gap in the state budget,” said Leader Cannizzaro. “Trump’s trade wars are killing American consumer confidence, reducing both domestic and international tourism to the state, and driving up prices for ordinary Nevadans. Today’s revenue projections show that our economy is now slowing with the potential for job losses and higher inflation on the horizon. Over the remaining few weeks of the session, Senate Democrats will work to minimize the damage and the impact on vital educational, health care, and social services that Nevadans need.”
For more coverage and analysis, here is an article in the Nevada Independent and The Nevada Current.