Nevada lawmakers will have about $191 million less to spend in the next two-year budget cycle than previously projected, according to updated forecasts from the state’s Economic Forum. Combined with a newly identified $160 million shortfall in the State Education Fund, the total budget gap now approaches $350 million.
The Economic Forum — a panel of private-sector economists whose projections must be used in the state budget — revised its December forecast downward on May 1. It now expects Nevada to bring in $12.2 billion in general fund revenue over the biennium, down from the $12.4 billion estimate Gov. Joe Lombardo used to craft his recommended budget.
This is the first time since 2009 that the Forum has lowered revenue projections mid-legislative session. With only a month remaining before adjournment, lawmakers are rushing to adjust.
The decline stems largely from reduced forecasts for the state’s sales and use tax, modified business (payroll) tax, and commerce tax. Economists blamed the downturn in part on lingering effects of Trump-era economic and trade policies, including reduced immigration, sluggish job growth, and lower tourism — especially from Canada, a major source of international travel to Nevada.
The State Education Fund is expected to bring in $160 million less than originally forecast, due to declining local revenues. Legislative and executive budget staff shared the estimate with lawmakers last week.
In anticipation of lower revenues, budget committees have already rejected about $130 million in spending proposals from Lombardo’s original budget. Still, that leaves a significant gap to fill.
The funding shortfall puts more than 300 bills in jeopardy, especially those with financial impacts. Proposals such as the expansion of the film tax credit face an uphill battle, and many bills have already been amended to eliminate costs.
Lombardo has five priority bills — three not yet introduced — that would cost more than $500 million combined. Those costs were included in his proposed budget. His office called the shortfall “manageable” and pointed to the state’s strong Rainy Day Fund as a buffer.
Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) said the focus will be on preserving existing services and said lawmakers may need to return for a special session to make further cuts.
Attorney General Aaron Ford, a Democrat running for governor in 2026, also criticized Trump’s policies, claiming they benefit billionaires while leaving working Nevadans to bear the consequences.
In addition to tax declines, the state also expects a $25 million drop in interest earnings and a $20 million decrease in commerce tax revenue. Some of this is tied to delays and issues with the state's new accounting system.