Sandoval reverses course, special session won’t address budget shortfall

CARSON CITY — Gov. Brian Sandoval abruptly abandoned plans Thursday to seek an even larger tax increase in an upcoming special session of the Legislature to plug a projected budget hole as conservative Republicans dug in their heels for a school choice program.

Some Republican lawmakers wanted the school choice issue resolved in the special session, and at least one suggested its omission could threaten passage of a financing package for a proposed football stadium and an expansion and upgrade to the Las Vegas Convention Center.

Lawmakers will convene Monday for a special session to consider room tax increases to help pay for the stadium and convention center improvements. Also on the agenda is authorizing Clark County commissioners to raise the sales tax to hire more police officers.

On Wednesday, the two-term Republican governor took funding for school choice — called education savings accounts or ESAs — off the table for consideration. But he said he would also ask lawmakers to bump the room tax increase another 0.12 percentage points and make an “allocation adjustment” from car registration fees to help fill a projected shortfall in the upcoming two-year budget cycle.

On Thursday, Sandoval reversed course and scrapped asking for more money from room taxes to shore up the budget.

“After consulting with legislative leadership I have decided that any potential budget challenges for the next biennium will be addressed during the next regular session,” he said in a statement.

Sandoval’s proposal had been met with pushback by conservative Republican lawmakers, who were briefed on the plan Wednesday night by the governor’s chief of staff, Mike Willden.

“We want ESAs as part of the special session,” said Assemblyman Ira Hansen, R-Sparks, who like others fear Democrats will retake control of one or both houses of the Legislature after the November election, killing any hope ESAs will be funded.

“The idea we don’t need to deal with this now is nonsense.”

ESAs became an issue for Sandoval and Republican lawmakers after the Nevada Supreme Court upheld their constitutionality but said they cannot be funded by taking money from public schools. A law passed by the Republican-controlled Legislature allowed parents to claim state per-pupil funding to send their children to private school or pay for other alternative educational programs.

The law, now on hold, would have provided about $5,100 per child per year. About 8,000 accounts were already set up within the state treasurer’s office. Funding those accounts for one year would cost about $41 million.

Now there are bigger budget concerns as well.

Sandoval last year pushed for and got a $1.5 billion tax package, the largest in state history, largely to finance his education agenda. But in March his administration told state agency heads to prepare flat budgets for the next cycle and prepare for possible 5 percent cuts.

Assembly Majority Leader Paul Anderson, R-Las Vegas, said the idea to try to nudge the room tax beyond the increase for the stadium and convention center projects in the special session and redirect money from the state highway fund into the general fund was an attempt to ease the budget burden when lawmakers convene in February.

The moves would have added about $150 million to the state coffers.

“All that money would have gone into general fund dollars,” Anderson said. “We are still working on pathways to fund the ESAs.”

Anderson, chairman of the powerful Ways and Means Committee, said the projected shortfall, estimated at $400 million, is attributed largely to caseload growth in Medicaid and public school enrollment.

He conceded there was also criticism from local governments and from within the resort industry, who complained of taxes being dictated by state administrators in Carson City without their input.

“The whole thing just got too complex, too quick,” Anderson said.

Assemblyman Jim Wheeler, R-Gardnerville, said many in the GOP caucus wanted the governor to push for stopgap funding for ESAs during the special session to get the program up and running while Republicans are in control.

Some conservative lawmakers felt Sandoval kept ESAs off the agenda so as not to risk Democratic votes for the stadium and convention center projects. Democrats were unanimous in their opposition to ESAs in the 2015 session.

Wheeler, Assembly majority whip, said he doesn’t know if conservative outrage over not including ESAs is strong enough to derail the stadium and convention center projects, though he added, “I got the impression there are enough people who would hold up the stadium for it.”

Those financing bills require a two-thirds supermajority vote for passage — 14 in the Senate and 28 in the Assembly.

Anderson said ESAs remain a Republican priority, and Sandoval this week said state Sen. Scott Hammond, R-Las Vegas, will lead a task force to try to identify a funding source for consideration by the 2017 Legislature.

“We know we all want ESAs,” Anderson said. “Frankly we just have to find the right way to do that. And Monday’s probably not the right time to do that.”

Anderson said the development projects are good for Southern Nevada and will create jobs and elevate Las Vegas’ stature as a global tourism destination.

He said the $750 million in public financing over 30 years for the stadium and $400 million for convention center upgrades present a “great opportunity” for the state.

“And I will stand up and vote for it,” he said.

But with the special session just days away, even Anderson’s not certain of what the final vote count will be.

“There’s plenty of support for the concept,” he said. “I couldn’t tell you today I have the votes.

“Whatever vote we need, it will probably be that plus one,” he said.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson, who are private partners in the stadium project.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-461-3821. Follow @SandraChereb on Twitter.