Lombardo calls for gas tax holiday, raises for state employees, and lots of saving for a rainy day

In his first state of the state speech, Republican Gov. Joe Lombardo on Monday made the case that Nevada “has more money than we can responsibly spend” and suggested that for every $1 in new general fund spending the state should squirrel away $1 into various savings accounts.

Lombardo is inheriting a healthy revenue forecast coming out of a pandemic biennium where revenue far exceeded economists’ expectations. But he faces a state legislature solidly controlled by Democrats.

That tension could lead to budget battles during the upcoming legislative session, which is scheduled to begin Jan. 6.

In his nearly hour-long speech on Monday, Lombardo laid out his legislative agenda. Several of his proposals related to elections, criminal justice, health care and school privatization were quickly rebuked by Democratic leaders. But others — including a gas tax holiday, cost of living adjustments for state employees, and increasing the K-12 education budget — were better received.

Lombardo said he plans to propose through legislation a one-year suspension of the state’s gas tax, which he said would save consumers and businesses approximately $250 million. Rollover revenue from the current fiscal year would backfill the budget shortfall created by the gas tax suspension.

The gas tax suspension would save a family of four “hundreds of dollars” over the year, Lombardo added. The state gas tax is $.23 per gallon.

Senate Majority Leader Nicole Cannizzaro in a press conference after the state of the state said she was “glad” to see the gas tax suspension pitched as a way to help everyday Nevadans who have felt pain at the pump but wanted to ensure that oil companies didn’t use it as an opportunity to pack their profits.

Lombardo is also proposing 8% raises for all state workers next year, a 4% increase the following year, and $500 quarterly retention bonuses. The proposal is part of Lombardo’s attempts to address the state’s high workforce vacancy rate.

Beyond that, the former Clark County sheriff is proposing even larger raises for state public safety personnel.

Democratic lawmakers have previously expressed support for raising state salaries.

Lombardo said his executive budget includes an additional $2 billion in new funding for Nevada’s K-12 education system and would increase the total per-pupil spending by more than $2,000 per student– from $10,290 this year to $12,406 in the upcoming fiscal year.

“Along with this funding, I expect results,” he said. “I won’t accept a lack of funding as an excuse for underperformance.”

Lombardo said he would work with the state superintendent on transparent and enforced accountability measures.

He added, “And if we don’t begin seeing results, I’ll be standing here in two years calling for systematic changes to the governance and leadership in K-12 education.”

Lombardo also proposed:

• Reducing the modified business tax rate to 1.17%, a 15% reduction
• Increasing the Rainy Day Fund cap from 20% to 30%
• Creating a sub-account within the Rainy Day Fund called the Nevada Way Fund that would be accessible through a committee comprised of the governor and legislative leaders
• Creating an Office of School Choice within the Department of Education
• $10.5 million for dual-language pilot programs
• $30 million for Teach Nevada Scholarships and student teacher stipends
• $30 million to preserve and expand pre-k
• Restoring college and university budgets to pre-pandemic levels
• Increasing Medicaid rates for physicians, dentist and nursing homes
• Creating an independent redistricting commission