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Nevada Governor Wants 10 Percent Tax on Retail Pot Sales

CARSON CITY, Nev. (AP) — Nevada Gov. Brian Sandoval outlined his budget blueprint for his final two years in office Tuesday by proposing more than $115 million in new spending for higher education and a raise for all state workers to be funded in large part by taxes on marijuana sales.

The second-term Republican unveiled a state budget proposal that would spend $8.1 billion over two years — nearly 11 percent more than the previous $7.3 billion budget — as part of a plan to continue Nevada’s economic recovery since the Great Recession.

“I’m glad to report the state of our state has dramatically improved, and we are growing stronger every day,” Sandoval said in an hour-long speech to a joint session of the Legislature in Carson City.

“Six years ago, many will recall the situation was quite different. The unemployment rate was a staggering 14 percent, and a record number of Nevadans were out of work,” he said, noting unemployment fell to 5.1 percent last month
After pushing a $1.5 billion tax package through the Republican-controlled Legislature in 2015, the only new tax he proposed for the new Democrat-controlled Assembly and Senate is a 10 percent excise tax on the retail sale of recreational marijuana.

It would come on top of a 15 percent wholesale tax that already was included in the ballot initiative voters approved in November legalizing recreational pot in Nevada and generate about $100 million combined in new revenue over two years devoted exclusively to education.

“While I did not support it, I respect the will of the voters who did,” Sandoval said about the recreational measure that passed by a wide margin. “I will ask regulators to limit the sale of marijuana products and packaging that appeal to children or may be mistaken for candy.”

Medical pot sales, which already were legal, would remain free of the 10 percent retail tax, which is expected to account for about $70 million of the projected $100 million.

Sandoval, 53, a former federal judge who will be forced out of office because of term limits at the end of 2018, said his budget plan makes good on a promise to fund the state’s school voucher program after the Nevada Supreme Court ruled the current funding formula was illegal. He proposed $60 million be spent over the next two years on the Education Savings Account the Legislature approved and he signed into law in 2015. The program allows parents to claim up to $5,000 in state money to send their children to private or other alternative schools.

That part of his speech brought mixed reaction in the Legislature. “I knew it would be a split house on that one,” Sandoval said.

Senate Majority Leader Aaron Ford, D-Las Vegas, said in the Democratic response any money directed toward a voucher program will result in less money being made available to public schools.

“We believe that this is the wrong priority for Nevada’s kids,” he said.

Ford said Nevada has made great strides under Sandoval’s tenure to diversify the economy and create new jobs but more has to be done to help those who’ve been left behind during the state’s economic recovery. He said his own party will present an alternative “Nevada Blueprint” when the 2017 Legislature convenes Feb. 6.

The $115 million in new money for higher education is intended to cover growing enrollment at UNLV and the University of Nevada, Reno, as well as cover half the costs of building a new $83 million engineering building at UNR. Funding for UNLV’s School of Medicine set to open next fall also continues at requested levels. Sandoval also asked for $20 million in one-time money to fully fund the millennium scholarship program to help Nevada high school graduates go to college, and more money for technical and vocational training at community colleges.

In addition to the 4 percent cost-of-living increase for all state workers, Sandoval proposed an additional 5 percent for correctional workers and information technology specialists. He says additional money also would be made available to cover increased costs in state workers’ health insurance.

Other budget priorities include a $100 million increase for a K-12 weighted school formula aimed at helping at-risk students who live in poverty or are learning to speak English, as well as special education and gifted and talented programs. He proposed $36 million for a new veterans’ nursing home in northern Nevada, a new Department of Motor Vehicles facility in south Reno and a new national guard readiness center in North Las Vegas.

Sandoval also included money to retrofit the state prison in northern Nevada to comply with the Americans with Disabilities Act, and establish a cyber defense office within the Nevada Department of Public Safety to better guard against computer hackers.

The centerpiece of his plan to spend $15 million more on state parks would be a new 12,000-acre Walker River Recreation Area in Lyon County, with 28 miles of riverfront on three historic ranches.

Sandoval highlighted Nevada’s economic and educational accomplishments the past six years, pleading with lawmakers to reject “counterproductive divisiveness of partisan politics” and instead “embrace the tradition of bridging our differences in honorable Nevada fashion.”

High school graduation rates have improved from 62 percent in 2010 to 74 percent in 2016, and state spending per pupil in the K-12 system has increased 10 percent during roughly the same period, he said.

Sandoval said Nevada has created 198,000 new jobs since 2011 for an all-time high of 1.3 million jobs with 72 consecutive months of job growth. The state has invested $721 million in tax breaks and other economic incentives that helped attract $6 billion in new businesses in forward-looking industries supporting more than 4,600 new jobs, including electric-car maker Tesla, he said.

The state also has spent $516 million specifically on solar energy development incentives, grants and loans and another $106 million in geothermal development that now has Nevada ranked 8th in the nation in renewable energy programs, Sandoval said.

Sandoval announced that Tesla plans to expand its northern Nevada factory manufacturing lithium-ion batteries to include the production of electric motors and gearboxes for its next car, the Model 3 — a move that will mean more than $350 million in additional capital investment and add 550 skilled jobs to Nevada’s new economy.

Tesla currently has more than 1,000 full-time employees and 2,000 construction workers on site at the “gigafactory” along Interstate 80 east of Sparks.

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