Sandoval proposes $6.5B general fund budget

(AP) - Gov. Brian Sandoval unveiled a $6.5 billion general fund budget proposal Wednesday that relies on extending taxes that would otherwise expire and diverting money from designated accounts to support basic state services.

About $649 million in the proposal comes from extending several taxes that would otherwise expire June 30. Combined with taking money from the state highway fund and a supplemental school account, along with continued prepayment of mining taxes, Sandoval's budget relies on $1.2 billion in extending taxes or diverting money to balance his budget.

Sandoval's spending plan is $342 million, or a little more than 5 percent, above existing budget levels. Administration officials briefly outlined the first-term Republican's plan to reporters before the governor's State of the State address Wednesday evening.

More than half of the spending increase would go to K-12 and higher education.

Sandoval is proposing K-12 spending of $2.46 billion in the upcoming biennium that begins July 1, an increase of $135 million over current spending. Nevada has some of the lowest graduation rates in the nation, and Sandoval has made education a priority for his administration.

He proposes increasing per-pupil support by 3.6 percent, to $5,567 in 2014, and 2.3 percent the following year to $5,697.

Sandoval's budget also includes $20 million to expand all-day kindergarten to more at-risk schools, and $14 million to target young students who are learning English as a second language. About 15 percent of Nevada students are English language learners.

For Nevada's universities and community colleges, the governor is proposing a $29 million increase, though full details were not immediately released. But Sandoval wants to increase support for the state's Millennium Scholarship program by $5 million, for a total of $20 million. He also wants $10 million for a Knowledge Fund - part of his economic development program two years ago to link academia with economic development that wasn't funded in 2011.

Nevada businesses would get a tax break under Sandoval's proposal to raise the exemption on payroll taxes from the first $62,500 in employee wages to $85,000. Budget Director Jeff Mohlenkamp said that equates to a $24 million tax break and would apply to another 2,700 employers.

Expanding Medicaid as called for under the federal Affordable Care Act, along with normal caseload growth, will cost the state an extra $138 million over the next two years, budget officials said.

Sandoval said expanding Medicaid will allow the state to shift mental health costs for mental health programs to the federal government, saving the state about $25 million over the biennium.

"Over the next six years, this comprehensive approach will create up to 8,000 new health care jobs," he said in his State of the State speech. He said his budget also includes more money for autism and early intervention services, as well as an urgent mental health clinic in Las Vegas.

State employees, who have taken pay cuts and furloughs since 2009, would get some relief under Sandoval's budget. Merit pay increases would be restored next year, and required furlough days would be reduced from six per year to three beginning July 1 at a cost of $40 million.