Nevada Governor Proposes New Business Fee to Generate $882 Million for Education

In his State of the State speech, Brian Sandoval called upon the Legislature to pass a new business license fee estimated to raise $430 million during the next two years.
by | January 16, 2015 AT 8:10 PM

By Kyle Roerink

In his third and most ambitious State of the State speech, Gov. Brian Sandoval unveiled a litany of education initiatives and tax reforms he wants the Legislature to tackle in the upcoming session.

MORE: Text, highlights and video of every governor's annual address.

He set the stage for a session that will harbor intense debates about Nevada's outdated revenue structure and bottom-tier education system.

Speaking for nearly an hour, he devoted more than 30 minutes to education reform, highlighting a plan to invest $882 million in education funding in the next two years. He outlined the plan as the beginning of a "new Nevada" and the foundation for education reform.

He didn't hesitate to say that Nevada's high school graduation rate and preschool enrollment were among the worst in the country.

And he didn't flinch at announcing his proposals for fixing them.

"We have relied on antiquated systems and half measures for too long, and our revenue structure no longer meets the needs of our growing and changing state," he said.

The ability to fund his proposals would come from old and new revenues. Sandoval called upon the Legislature to pass a new business license fee estimated to raise $430 million during the next two years.

The calls for a new fee are likely to chide the state's anti-tax conservatives in the Legislature. Sandoval, cognizant of the potential backlash that talk of new revenues will incite within his Republican Party, called upon skeptics to embrace his proposals.

"I ask all of you to rise above that which seems easy," he said.

The other revenue component hinges on the extension of the sunset taxes, a $650 million package ushered in by former Gov. Jim Gibbons to help the state recover from the recession. The sunsets were supposed to be temporary. But Sandoval, who has encouraged extending in the last two legislative sessions, signaled the tax package shouldn't expire.

"It's time we be honest with ourselves," he said. "These revenues are part of our comprehensive budget."

Many of the state's mainstream business leaders and policy wonks have come to terms with bolstering education funding and reforming the tax structure. But many are at odds on how to do it.

The Las Vegas Global Economic Alliance, which has received at least $2.9 million in state funding, called Sandoval's plan courageous.

"We are pleased to see the governor advance funding solutions to address the essential requirements of K-12 education," said alliance CEO Tom Skancke. "Nevada cannot keep saying 'no' to solutions."

The Las Vegas Metro Chamber of Commerce, which represents 4,000 businesses, wants more details and conversation about the proposed business license fees and extending the sunsets. It recently commissioned the Washington, D.C.-based Tax Foundation to do a study and issue solutions for revising the state's revenue picture.

"The governor's speech starts the conversation tonight," said Metro Chamber President and CEO Kristin McMillan. "The governor put out his recommendations. But there are going to be many other recommendations coming."

The Nevada Policy Research Institute, a right-leaning think tank, was skeptical about Sandoval's proposals.

"Gov. Brian Sandoval's State of the State speech was full of promises and platitudes, but Nevada students, parents and taxpayers should be very worried about the details glossed over and left out of his speech," NPRI Vice President Victor Joecks said in a media release.

The list of items Sandoval asked the Legislature to consider was extensive and will dominate much debate in Carson City. Here are a few policies and dollar amounts Sandoval recommend:

--$10 million for gifted students

--$50 million for disadvantaged students

--$20 million for career training and STEM programs

--$50 million for new tech in public schools

--Funding for UNLV medical and hotel schools

--Collective bargaining reform

--All-day kindergarten throughout the state

--Increased preschool enrollment

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