Sides only this far apart on how to pay for K-12

By J. Patrick Coolican (contact)

Tuesday, May 15, 2007 | 7:32 a.m.

CARSON CITY - Assembly and Senate negotiators have made significant progress and are moving closer to an agreement on K-12 education funding, according to legislative sources close to the conversations.

Education is by far the largest part of the two-year $7 billion budget, and any agreement could mean the Legislature will finish its work under the constitutionally mandated 120 days.

Leading issues include all-day kindergarten, higher education and a few of Gov. Jim Gibbons' initiatives, including tax cuts for business and one-time appropriations for the charities of some prominent Nevadans, including liquor magnate Lou Ruvo and developer Harvey Whittemore.

Specifically, Assembly Democrats had hoped to expand all-day kindergarten from at-risk schools to all children, although that seems unlikely given pessimistic sales tax revenue figures from the state's budget forecasters.

Senate Republicans hope to protect higher education and the governor's priorities.

The state's budget outlook is not as hopeful as legislators assumed going into the session. The state will take in upward of $100 million less than expected between now and 2009, according to the Economic Forum, which is the state's official forecasting body. Once legislators had that number, they began talking.

The governor's proposed budget allocated 33.1 percent of the total to K-12 education, down from 33.9 percent in the current budget. Assembly Democrats have sought to increase that portion.

Negotiators have made significant progress in the past week, working after hours, although a lobbyist said that if an agreement isn't reached by Friday, both sides would likely walk away for a cooling-off period. That would significantly delay an agreement and could lead to a special session that would run past the June 4 deadline.

Because of the Education First constitutional amendment passed last year, the Democratic-controlled Assembly and Republican-controlled Senate must fund education before anything else.

Still, sources say, the negotiations are within the context of the entire budget, such that once an agreement is reached on K-12, everything else will fall into place.

There are some wild cards, however. The less-than-expected revenue numbers are, in part, because of tax breaks given to builders using "green , " or environmentally friendly , methods and developing green buildings. Far more developers have applied for the breaks than expected, and the Legislature and the governor are working on a fix for the problem.

Also, Gibbons and Assembly Democrats have proposed transportation plans to deal with the state's $3.8 billion shortfall on roads that's expected between now and 2015. The governor's proposed budget doesn't touch the shortfall, which means any transportation plan would require cuts from somewhere else or new revenue.

So, Gibbons has proposed taking money from the hotel room tax, which currently goes to the Las Vegas Convention and Visitors Authority . The idea is adamantly opposed by the state's tourism industry and has little backing among legislative leaders.

The plan hit another snag Monday when the LVCVA's bond attorney said it would violate the terms of bonds recently issued by the authority to upgrade the convention center, and, thus, could be against the law.

Because buyers of the bonds thought they were backed with room-tax money, they could argue that diverting the money is a breach of contract, the legal opinion states.

Assembly Democrats have proposed getting revenue from a weight-distance tax on trucks.