The stock market is all over the place as fallout over President Trump’s tariff war continues to play out. People are worried about their declining 401Ks. Nevada’s government retirees fret over their pensions.
At the same time, concerns that the downturn is already affecting tourism—the main economic engine for the state—grew after international travelers to Reid International Airport fell in February.
In light of that, Nevada lawmakers are trying to figure out a plan to keep the state financially secure during a downturn.
During an evening Ways and Means Committee meeting in late March, Chair Daniele Monroe-Moreno asked legislative staff to give an in-depth presentation outlining steps previous lawmakers took to address the economic fallout associated with 2008’s Great Recession and the pandemic. And for three and a half hours, the committee’s fiscal analysts outlined the cause and effect of every cut and furlough lawmakers approved as part of the state’s recovery from those downturns.
It’s not something that happens very often, but it could prove to be a useful exercise, according to former state Senator and Assemblymember Maggie Carlton. Carlton served as the chair of the Assembly Ways and Means Committee from 2015-2023.
She told State of Nevada she remembers walking through all of the cuts lawmakers needed to make as an effort to stave off the worst effects of the COVID-19 pandemic.
“I remember telling them all there are good times and there are bad times, but we have to be there for the people of Nevada,” she said.
However, there are also key differences between the state’s current financial situation and previous economic downturns – namely, the role of the federal government.
Since taking office, the new Trump administration has taken drastic steps to limit the size and scope of the federal government. That includes laying off federal workers, eliminating funding for the humanities, and the claw back of funding for community solar programs. Congressional Republicans have also signaled that they are prepared to cut funding for programs such as Medicaid as a way to pay for the president’s priorities.
Carlton said this time it’s different.
“The federal government there to help back us up with the amount of dollars that we received from the federal government to make sure that the state kept functioning, that Nevadans had the resources that they needed to keep their families safe and secure and fed. It was great. What we're looking at now is not the same.”
In 2022, about $10 billion came to Nevada governments from the feds. That’s almost 28% of all revenues to Nevada governmental bodies. Those funds are now potentially on the chopping block due to the Trump Administration's fundamental restructuring of the federal government.
Of course, Nevada does collect some tax money. The rest of the state’s money comes from a variety of sources, with sales and property taxes as well as the revenue generated from gambling and tourism, making up a vast majority of those dollars.
However, some believe that the state’s tax structure is antiquated.
“We are operating under a financial structure that was put into place when there were 300,000 people in the state, now we have 3.5 million,” said Fred Lokken, Professor of Political Science at Truckee Meadows Community College.
“We don't have a state income tax,” he continued. "We limit our property taxes. We've been very reluctant to tax businesses, whether it's mining or banking, at a level that is consistent in most other states. We've created a revenue nightmare in the state, and it's gotten worse because of our growth.”
As of now, it is unclear what the state’s financial picture will look like by the end of this legislative session. State lawmakers are currently waiting on May’s Economic Forum to make final decisions about the next biennium’s budget.
Until then, lawmakers will have to hope for the best.
Guests: Maggie Carlton, former state assemblymember and senator, current lobbyist, Culinary Union; Fred Lokken, professor of political science, Truckee Meadows Community College
