Sandoval calls for $135 million more for schools in State of the State

CARSON CITY - Gov. Brian Sandoval took a typically upbeat tone in his State of the State remarks Wednesday, saying Nevada's economy is improving though it is a "success story not fully realized."

His comments focused primarily on his twin themes of improving education and expanding the economy.

He called for $135 million in new spending on public education, including money to expand full-day kindergarten to more schools and help more students master English by the end of the third grade.

Sandoval's proposed $6.55 billion general fund budget seeks to continue a package of taxes that otherwise would expire on June 30. It also proposes to expand an exemption from the modified business tax to 2,700 additional Nevada employers.

The $1.2 billion in additional tax revenue generated from the extension of the current tax package - $649 million of which would flow directly to the general fund - would be spent primarily on public education, higher education and an expanding Medicaid population.

"We are emerging from the worst economic crisis of our generation," Sandoval said in his remarks before the packed Assembly chambers. "And though it remains unacceptably high, our unemployment rate is lower than it has been in over three years, and it is falling faster than almost every other state in the nation."

Sandoval said his budget looks to make the necessary immediate decisions for the next two years, including expanding Medicaid to a new eligible population under the Patient Protection and Affordable Care Act, but it also seeks changes to help "a Nevada that is still on the horizon."

While pledging to work with Sandoval to address the challenges facing Nevada, Senate Majority Leader Mo Denis, D-Las Vegas, criticized him for proposing to extend a tax package that would "cut taxes on 2,700 businesses in the state while raising the sales tax on middle-class families." The package of taxes proposed by Sandoval to continue in the 2013-15 budget includes a 0.35 percentage point sales tax increase to help fund public education.

"We are told that taxes are too high and, thus, stifle job growth," Denis said. "I agree, taxes are too high on the middle class and poor. Yet, other states in the Western United States have higher tax rates and have seen larger job growth."

Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said Democratic leaders will start discussing the tax structure the first week of the Legislature to look for more revenue, but she wouldn't commit to any specific new taxes or increases, including a profit margins tax on businesses that the teachers union would like to pass.

"We're going to have that discussion," Kirkpatrick said, adding, "Everything else should be on the table."

The Legislature, where Democrats have majorities in both the Senate and Assembly, will start its four-month review of Sandoval's budget on Feb. 4.

Responding to the Democratic criticism aimed at the further tax break for small businesses instead of a sales tax reduction, Sandoval said after his speech that he proposed the idea in part because of financial mandates on employers in the new federal health care law.

In his address, Sandoval announced initiatives aimed at improving public education. They include $20 million to expand all-day kindergarten to 46 more at-risk schools from the current 114 and $14 million to help preschool through third-grade students become English- proficient.

"The Clark County School District alone is responsible for more than 50,000 English language learners, representing more than 150 languages," Sandoval said. "The challenges these students confront are wholly different from those faced by their peers, yet our obligation to them is no less important."

Sandoval is proposing to spend $2 million for the Teach for America program to help recruit, train, develop and place top teacher and leadership talent in Nevada, and $1.5 million for a pilot program called Jobs for America's Graduates in seven Nevada schools.

"JAG helps prevent dropouts by putting a specialist in the school to work with the most at-risk students," he said.

Victor Wakefield, executive director of Teach for America Las Vegas Valley, said he was pleased to hear Sandoval make education a priority and provide an endorsement of the program.

The program already has 170 first- and second-year teachers in the Las Vegas area, he said.

"We are incredibly impassioned by his support, and we're hopeful it will lead to the right kind of steps for Nevada's kids," Wakefield said.

Carolyn Edwards, president of the Clark County School Board, said she was encouraged that Sandoval emphasized education but disappointed he didn't restore much education funding.

Edwards said her district has experienced $560 million in budget cuts during the past five years and cut 3,400 positions. The school district cut 1,000 teacher positions in the past year, including 175 literacy specialists.

"I think in the first place, we need to restore the funding we lost," Edwards said. "While he's talking about reading, I'm losing teachers and literacy specialists. I certainly want those 1,000 teachers back that we lost last year."

Gary Peck, executive director of the Nevada State Education Association, said Sandoval's budget "leaves too many kids behind."

"The funding increases he is proposing are inadequate to meet the challenges our kids are facing," Peck said. "It just reinforces our commitment to doing everything we can to ensure our ballot initiative is enacted to fix our broken tax structure and create a dedicated source of funding for K-12 education."

Sandoval said he will seek to expand school choice, but he stopped short of calling for a full voucher program that would allow students to attend private schools using state tax dollars.

Instead, he will seek an "opportunity scholarship" bill giving businesses a tax credit for contributing to a scholarship fund.

The money would be distributed, on a means-tested basis, to students at low-performing schools for use in attending the school of their choice.

On the economic development front, Sandoval is proposing to put $10 million into the Knowledge Fund for commercial research at the Nevada System of Higher Education. It was created by the 2011 Legislature but did not receive any funding in the current budget.

Sandoval said he will seek to restructure the nearly $703 million Nevada owes the federal government used to pay unemployment benefits over the past several years.

"This step will save employers $9 million, stabilize the rate paid by businesses, and ensure that the entire amount is paid off by 2016," he said.

Sandoval also wants to move forward quickly on the online poker issue, saying the Nevada Gaming Control Board will bring legislation to eliminate Nevada's statutory barriers to interstate online poker and ask for authority to enter into interstate agreements.

"Other states are moving quickly on this issue, and I ask you to pass a bill within 30 days," he said.

Sandoval also plans to make improvements in mental health, proposing to spend $800,000 on a 24-hour, urgent care mental health center in Las Vegas.

State employees will see some restoration of benefits lost over the past four years. Sandoval's budget will cut furlough days from six to three and restore merit pay in the second year of the budget for a total cost of $40 million for both programs.

"In this budget, we've reduced the tax burden on local businesses, we've addressed increasing caseloads, and we've begun to diversify our economy," Sandoval said. "The social service net is stronger. Support for education is increased.

"Nevadans will continue to benefit from the over-arching policy of this administration throughout this economic downturn - that is, we cannot cut our way out, we cannot tax our way out, we can only grow our way out. And that is exactly what we are doing."

Review-Journal reporter Laura Myers contributed to this report. Contact reporter Sean Whaley at swhaley@ reviewjournal.com or 775-687-3900.