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With SB 545 and a Proposed AB 309 Amendment, Sisolak and Democratic Legislative Leaders May Have Figured a Way Out of Their Budget Bind

Yesterday Democratic leaders in the Nevada Legislature dropped SB 543 to reform the K-12 school funding formula, but not add additional funding for K-12 schools. Today, Governor Steve Sisolak (D) and Democratic legislative leaders finally addressed the second part of this equation. Another new bill dropped to fix the two-year-old conundrum of marijuana excise tax money filling Rainy Day Fund coffers when it’s pouring on Nevada’s public schools, while an already existing bill will be amended to punt the rest of this hot potato onto counties.

And like that, the budget bind might be fixed and the “Sine Die Train” may be back on track for an on-time arrival.

Why’s that pot money been going into that pot?
Photo by Jennifer Martin, lienced under Creative Commons, and made available by Wikimedia

Remember that at the very end of the 79th Session of the Nevada Legislature in 2017, then State Senate Minority Leader Michael Roberson (R-Henderson) threatened to blow up the entire state budget in a last-minute attempt to save ESA private school vouchers. When then Governor Brian Sandoval (R) and Democratic leaders had to do clean-up and rebuild the final budget deal, they decided to send the 10% marijuana excise tax revenue to the Rainy Day Fund to make it to Sine Die on time.

Since then, the State of Nevada collected $69.8 million in total marijuana tax revenue in Fiscal Year 2018. Of that $69.8 million in total revenue, $27.5 million in 15% wholesale tax revenue went into the Distributive School Account (DSA, or the state’s main K-12 public school budget) as 2016’s Question 2 directed, while $42.5 million in 10% retail (or excise) tax revenue went into the Rainy Day Fund. And in according to the Department of Taxation’s December 2018 marijuana tax report, the state is expecting to a collect a total of $69.4 million in marijuana tax revenue in Fiscal Year 2019. Of this $69.4 million projection, $32.4 million is expected to go directly into the state’s K-12 education account while $37 million is expected to go into the Rainy Day Fund.

Earlier today, Senate Democratic leaders dropped SB 545 to fix what went sideways in 2017. If it becomes law, SB 545 will finally move marijuana excise tax revenue from the Rainy Day Fund to the DSA (K-12 budget). If the next two years are anything like these last two years, this may bring Sisolak anywhere from ⅔ to ¾ of the way to the $107 million needed to fulfill his promise of a 3% teacher pay raise.

Why is Carson City’s “Sine Die Train” taking a sharp left turn into the Clark County Commission?
Photo by Andrew Davey

Nearly two months ago, Assembly Speaker Jason Frierson (D-Las Vegas) introduced AB 309 with the original intent of streamlining state public education budget accounts. But earlier today, The Nevada Independent reported that AB 309 will be amended to authorize county commissions to raise their respective sales taxes to fund social safety net programs like early childhood education, teacher recruitment, affordable housing, and homelessness relief efforts. In addition, the proposed AB 309 amendment will redirect $38.6 million that’s held in a state reserve account for Zoom Schools and Victory Schools and disperse it to school districts in the next two years. $26 million of that $38.6 million will go to the Clark County School District (CCSD), and under the proposed amendment CCSD Trustees can opt to use that additional $26 million to fill their general fund if they so choose.

If the Clark County Commission (which is entirely Democratic) approves a 0.25% sales tax hike, that may result in $212 million in new revenue over the next two years here. If the Washoe County Commission also approves a 0.25% sales tax hike, that’s another $42 million for there (though with Republicans holding a supermajority on that commission, this one’s more in doubt). And like that, the budget hole can be filled and Sine Die can be reached regardless of how the Nevada Supreme Court or Senate Republicans rule on extending the current payroll tax rate.

With the estimated $70-80 million that SB 545 will redirect from the Rainy Day Fund into the state’s K-12 education account, $38.6 million that the state will release to school districts to help fill their budget holes under AB 309, and the possibility for at least another $212 million for Clark County if this commission opts into the AB 309 sales tax hike, Sisolak and Democratic leaders may have finally found a way to diffuse the ticking time-bomb that Republicans have been threatening to detonate by withholding their votes for the payroll tax extension and other possible tax bills. While this is still far from enough to permanently fix the state’s systemic fiscal woes, it’s probably enough to ensure the Sine Die train runs on time.

The cover photo was obtained under a public domain license and made available by libreshot.com.

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