Nevada’s $191M budget blow: Cuts loom as revenue dips
Nevada’s lawmakers are bracing for a fiscal storm as the Economic Forum, a panel of private-sector economists, delivered a sobering update: the state’s two-year budget projection is $191 million lower than anticipated in December. This 1.6% reduction, the first mid-session revenue drop since 2009, is poised to trigger a wave of budget cuts, threaten hundreds of bills, and reshape the state’s financial landscape with just a month left before the Legislature adjourns.
The Numbers Tell the Story
The revised forecast estimates Nevada will collect $12.2 billion in revenue over the next two budget years, down from the $12.4 billion projected in December. Here’s where the numbers shifted:
Sales and Use Tax: Down $102 million, a 2.7% drop, driven by weaker consumer spending and a gloomier economic outlook.
Modified Business Tax: A $58 million decrease, tied to sluggish job growth—private employment grew just 0.5% this year, a sharp decline from last year’s 2.5%.
Commerce Tax: Down $20 million, hampered by a new state accounting system and broader economic woes.
Interest Income: A $25 million shortfall from the Treasurer’s office, partly due to forecasting adjustments and system changes.
Live Entertainment Tax: A modest $1 million dip, with stable event attendance despite tourism declines.
Gaming Percentage Fees: Flat for FY2026, with slight growth expected later.
Not all news was grim. The Insurance Premium Tax is projected to rise by $46 million, as people prioritize insurance payments even in tough times, and the Real Property Transfer Tax will see a $7 million uptick, though growth may slow as fewer people relocate to Nevada.
Education Funding Takes a Hit
Perhaps the most alarming blow is to the State Education Fund, which faces a $160 million shortfall, contributing to a total funding drop of $350 million. This reduction, detailed in a joint forecast from the Legislative Counsel Bureau and the Governor’s Finance Office, threatens to strain Nevada’s schools at a time when resources are already stretched thin. Assembly Speaker Steve Yeager (D-Las Vegas) shared the grim figures, underscoring the challenge ahead.
Why the Shortfall?
Economists pointed to President Trumps trade tariffs and immigration restrictions as culprits. Canada, which accounts for 30% of the state’s international visitors, is scaling back travel plans due to trade tensions, as noted by Moody’s Analytics senior economist Emily Mandel. Nevada’s high exposure to Chinese imports, concentrated in electronics and communications, adds further uncertainty, according to David Schmidt, chief economist for the Nevada Department of Employment, Training and Rehabilitation.
The state’s economy is already flashing warning signs. Revenues for the first 10 months of the fiscal year are down $100 million (3%) compared to last year, which benefited from one-off boosts like the Super Bowl and Las Vegas’ first Formula One race. A strained labor market and modest unemployment gains compound the challenges.
Political Fallout and Tough Choices
With the clock ticking, lawmakers face a mad dash to balance the budget. The Legislature’s fiscal committees have already slashed $130 million by rejecting new positions and programs proposed in Gov. Joe Lombardo’s budget, but more cuts are needed. Over 300 bills with financial implications, including a high-profile film tax credit expansion, hang in the balance. Lombardo’s five priority bills, three of which are yet to be introduced, carry a $500 million price tag—already baked into his now-overbudget plan.
Gov. Lombardo, a Republican, remains optimistic, calling the shortfall “manageable” and pointing to Nevada’s robust Rainy Day Fund. “Nevadans can rest assured that the State is well-prepared to navigate moments of fiscal uncertainty,” said spokeswoman Elizabeth Ray. However, Democrats are sounding the alarm. Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) warned of potential special sessions to address further cuts, blaming President Trump’s policies for deterring tourists.
What’s Next?
The budget crunch will force tough trade-offs. Cannizzaro emphasized preserving existing programs, but new initiatives may be shelved. The education funding gap looms large, potentially impacting classrooms across the state. Meanwhile, the uncertainty of federal budget cuts—Nevada relies on federal funding for nearly a third of its budget—adds another layer of complexity.
As Nevada navigates this fiscal tightrope, the coming weeks will test lawmakers’ ability to prioritize and compromise. Will they lean on the Rainy Day Fund, as Lombardo suggests, or face deeper cuts that could reshape the state’s future? One thing is clear: the road to a balanced budget will be rocky, and Nevadans are watching closely.
This article draws on data from the Economic Forum’s May 2025 projections.
