CARSON CITY, Nevada — Gov. Brian Sandoval on Thursday proposed hundreds of millions of dollars in new taxes as part of two-year, $7.3 billion budget that would address a looming deficit while adding nearly $900 million to make education improvements he says are long overdue.
The moderate Republican elected to a second-term in a landslide in November said in his State of the State address that Nevada's economy is steadily growing and diversifying after suffering through the Great Recession, but still has many challenges ahead.
Sandoval is asking the Legislature controlled by the GOP for the first time in 20 years to approve about $1.14 billion in additional revenue, much of it through a variety of taxes on businesses and a 50 percent hike on the cigarette tax.
His overall education package for pre-kindergarten through high school would increase spending $782 million over the two years, including more than doubling current spending levels to $150 million to implement full-day kindergarten statewide. He also recommends new programs targeting the gifted and talented, as well as the poorest schools and those with the most students learning English.
"I never imagined the day when a Republican governor would be proposing things I'd been fighting for all this time," said state Sen. Mo Denis, D-Las Vegas, a major proponent of English learner programs last session.
An additional $100 million in new spending is aimed at higher education to help provide the highly skilled workers needed for future economic growth.
"I am therefore proposing a broad-based solution that asks Nevada business to invest in our education system," Sandoval said in a 55-minute speech interrupted numerous times by standing ovations.
"I realize these decisions are difficult. I know I am asking a lot from the business community," he said. "But I have explored every option and find this to be the broadest, least complicated and fairest solution."
The tax plan drew anticipated criticism from the most conservative Republicans.
"I don't think the people have an appetite for taxes," said Assemblywoman Victoria Seaman, R-Las Vegas, noting that voters handily defeated a proposed margins tax in November.
But leaders of both parties signaled a willingness to try to find common ground.
"For far too long, our 'leaders' have elected to accept the status quo rather than face head-on the difficult issues facing our state," Senate Majority Leader Michael Roberson, R-Henderson said. "Gov. Sandoval is providing the courageous leadership that so many Nevadans have longed for."
Assembly Minority Leader Marilyn Kirkpatrick, D-Las Vegas, agreed.
"Our work will require give and take on all sides," she said.
Nearly half of the additional revenue the governor is proposing would be raised by extending a series of "sunset" taxes that otherwise are scheduled to expire in June 30 — roughly $580 million.
"It's time we are honest with ourselves — these revenues are now part of our comprehensive budget," Sandoval said.
Assemblywoman Michele Fiore, R-Las Vegas, vowed to vote against such an extension.
"The people of Nevada were promised that these emergency taxes were only temporary until 2011," she said. "It is time for the Legislature to keep its promise."
The biggest chunk of the new money, about $437 million, would be generated through higher business license fees on a sliding scale that would cost the smallest businesses about $400 a year and the biggest up to $4 million a year. Currently, all business licenses cost $200 annually, regardless of whether they are for a hot dog stand or hotel-casino.
Sandoval says his budget blueprint would fill what is expected to be about a $170 million deficit when lawmakers gather Feb. 2 for a 120-day session.
He will have to sell the idea to anti-tax conservatives as well as Democrats historically reluctant to embrace some of the school overhauls he's proposing, including potentially subjecting persistently under-achieving schools to a new system free of collective bargaining requirements.
"While many must recognize the hard truth that our education system will not improve without more funding, others must accept the reality that improvements will not be made without accountability measures, collective bargaining reform and school choice," he said.
His biggest challenge likely will be pushing the package through the Assembly, where Republican infighting has already triggered a power struggle between the most conservative and more moderate members of the party. He appealed to members of both parties to have the "courage" to "rise above that which seems easy."
Speaker John Hambrick, R-Las Vegas, said he would work to iron out the tensions in his caucus.
"I will do my best to reach out my hand and get this thing going," he said. "We need to come together and do the people's business and if we do anything less, shame on us."