Nevada legislators will have about $191 million less than originally anticipated to build a new two-year budget. That’s according to the latest analysis from the state’s Economic Forum, which met last week. As KNPR’s Paul Boger reports, the revised projections mean lawmakers will have to make tough choices in the final weeks of the legislative session.
When lawmakers gavelled in the 83rd regular session of the Nevada Legislature in early February, they did so with the expectation that the state would generate about 12.4 billion dollars in tax revenue over the next two years.
Since then, things have changed.
‘I don't think this will come as a surprise given some of the conditions that we've been hearing about lately in the news and in the data, but we have significantly downgraded our growth expectations for the United States and for the state of Nevada since our last forecast,” said Emily Mandel, a senior economist with Moody’s Analytics, speaking to Nevada’s Economic Forum – a panel of five private-sector economists who provide state leaders with tax revenue forecasts. Policymakers must use the group’s May 1st projections to finalize a state budget.
Mandel says the primary reason for the revision is uncertainty caused by the tariffs recently imposed by U.S. President Donald Trump.
“We think that it will do real damage to the economy,” she added.
Overall, Mandel’s forecast shows Nevada should dodge a recession, assuming the Trump Administration makes concessions on trade policies. That is something the president has signaled he’s willing to do. If not, the economic outlook could worsen.
For now, Nevada’s General Fund budget for the upcoming biennium is 12-point-two billion dollars. That’s about 200 million dollars more than the current biennium, but roughly 200 million dollars less than what the Economic Forum predicted in December.
And while projections show slight growth in gaming and property taxes, they also predict declines in sales and use taxes, as well as the Commerce and Modified Business Taxes — revenues directly related to consumer confidence.
“This will be a fairly deep deceleration from where we've been over the past year,” according to Mandel. “We've had quite a strong economy coming into this year. Even a lot of the hard data through the first quarter of the year have been quite strong, and so it'll be quite a significant slowdown, and that'll be felt by households and felt by businesses.”
Legislatively, hundreds of bills with fiscal notes are essentially no longer up for consideration. It also hampers the agendas of Governor Joe Lombardo, who wants to crack down on crime, and Democratic legislative leaders, who promised to expand pre-K education.
“I think the focus for us now is to make sure that we are keeping intact the services and the programs that we have here in Nevada to continue to provide healthcare to working families, to continue to provide education to children," said Senate Majority Leader Nicole Cannizzaro, a Democrat from Las Vegas. "Those are going to be at the forefront of everybody's minds.”
Republicans expressed less concern about the revised projections.
Governor Joe Lombardo’s Communications Director, Elizabeth Ray, called them “manageable.” Ray said the state is well-positioned to navigate the current fiscal uncertainty with a record 1.3 billion dollars in the Rainy Day Fund.
“Should any unexpected budget issues arise later in the upcoming biennium, Nevadans can rest assured that the state is well-prepared to navigate moments of fiscal uncertainty,” she added.
“The sky is not falling,” said Senate Minority Leader Robin Titus, a Republican from Wellington.
“There's been a lot of drama about this,” said Titus. “We are not in the same position we were in 2008, 2009, and the 2019 and 2021 situations, where there's some bigger, much bigger crises, much bigger fund deficits. We recovered from that, and I think right now we're in a very good shape. That's why we have a rainy day fund.”
Democrats, on the other hand, seem more hesitant to dip into the state’s savings, pointing to ongoing questions about the reliability of future federal support.
Analysis by the Guinn Center for Policy Priorities found that federal funding currently accounts for nearly 28 percent of the state’s total budget. A majority of that money, nearly 80 percent, went to the Department of Health and Human Services to support programs such as Medicaid. It provides coverage for approximately one in four Nevadans. The other 20 percent is split between highway funds, dollars for education and agricultural programs, as well as job training.
However, the Trump Administration and Congressional Republicans have prioritized scaling back the government’s size and scope — a vision that includes cuts to Medicaid.
Cannizzaro says that would leave the state with two options.
“If those federal dollars are also not in our budget, we have to make a determination whether or not those programs are then cut or if we have state funds to backfill,” Cannizzaro said. “Obviously, with lower projections and revenues, the idea that we would have additional state dollars to fund those is exceedingly rare.”
Lawmakers have less than a month to finalize a state budget. The 2026-27 Biennium starts July 1st.
