Sandoval to add 10% tax on retail marijuana to help pay for programs in $8.1B budget

CARSON CITY — Nevada Gov. Brian Sandoval on Tuesday outlined a final proposed two-year budget that has something for just about everyone, from $60 million for the controversial education savings accounts to $26 million in new money for UNLV’s fledgling medical school.

Sandoval’s proposed 2017-19 budget totals just under $8.1 billion, a 10.4 percent increase over the $7.3 billion spending plan for 2015-17. It is balanced with only one new revenue source, a proposed 10 percent retail tax on the sale of recreational marijuana.

This new levy, which would come on top of an existing 15 percent wholesale tax, would generate nearly $70 million in new funding for Sandoval’s public education priorities.

Sandoval opposes recreational marijuana but is moving forward with controlled sales of the drug by next year because voters approved Question 2 in the November general election.

Mike Willden, Sandoval’s chief of staff, said the budget is balanced with $7.9 billion in estimated revenue, a healthy ending fund balance and the proposed new marijuana tax revenue.

These factors closed the gap between the $8.3 billion sought by state agencies and the current $7.3 billion spending plan despite early reports that the state faced a looming deficit.

“We’ve never been in the red,” Willden said of the budget.

In all, Sandoval proposes spending more than $125 million in new money for K-12 education, including $30 million for special education, $42 million for Zoom Schools focusing on English language learners, $30 million for Victory Schools in high-poverty areas and $4.3 million for gifted and talented students.

Higher education is also in line for a big increase in new funding, bringing total spending to $1.265 billion, or 12.6 percent more in general fund spending.

The $142 million in new investment for the Nevada System of Higher Education includes $21.3 million for student enrollment growth at the University of Nevada, Reno, $37.4 million for UNLV and $21.4 million for career and technical education at the state’s four community colleges.

For UNLV’s new medical school, total funding for the coming two years would amount to $53 million.

There is also $83 million for a new engineering building at UNR, with half coming from state funds and half from the university.

The proposed funding for Education Savings Accounts, which would allow parents to receive $5,100 to pay for the cost of private school, including religious schools, would be placed in a separate budget account to comply with last year’s Nevada Supreme Court ruling that said the original funding mechanism was unconstitutional.

The new ESA program, which will be outlined in legislation, would set aside $25 million in the first year and $35 million in the second for a total of $60 million. This is less than the about $80 million that would be needed for the 8,000 families already signed up for the program.

Willden said the legislation remains a work in progress, and that Sandoval is considering the possibility of income limits on who would be eligible for the money.

“It’s a good start,” he said of the funding recommendation.

Democrats were unanimous in opposing the program in the 2015 session, but it was found to be constitutional in the Supreme Court ruling.

Among other highlights:

■ $15 million in new funding for new state parks and upgrades to the existing park system.

■ Just over $100 million for raises for state workers, 2 percent in each year of the budget.

■ Additional 5 percent pay hikes for correctional officers.

■ $3.9 million to address drought planning.

■ $3.5 million for a new Office of Cyber Defense.

■ $25 million in additional funding, including $20 million from the general fund, to maintain the current benefits under the Gov. Kenny Guinn Millennium Scholarship account.

■ $3 million per year added to specialty courts to help reduce the costs of incarceration.

■ $173 million in general funds for Medicaid caseload growth and changes to the state-federal funding formula. The caseload is projected to grow from about 630,000 now to 676,000 by the end of the next budget.

■ $6 million to add 200 beds to the Southern Desert Correctional Center as part of a plan to accommodate inmate growth. The state Parole and Probation Division is also charged with processing 300 to 400 inmates to avoid the cost of constructing a new prison.

The budget also allows for additional contributions to the state’s rainy day fund, which should reach $200 million by the end of the next budget.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.