How Trump policies could tank this swing state's revenue — and create a state budget crisis

The state budgeting process began with a $335 million oopsie, and while it may have been resolved, a potentially much larger fiscal crisis looms: the Trump administration.

State lawmakers in the early days of the 2025 Legislative Session are warning that actions being taken by President Donald Trump through a deluge of executive orders, as well as legislation being considered by the Republican-controlled Congress, may have a disastrous effect on Nevada.

But the more immediate issue of a $335 million structural deficit in Gov. Joe Lombardo’s recommended budget has been addressed, according to the governor’s staff. Lombardo Chief of Staff Ryan Cherry on Wednesday provided an overview of four dozen budget amendments to legislators on the Senate Finance and Assembly Ways and Means.

Democrats took issue with some of the mechanisms the governor’s office used to balance the budget–specifically, turning some funding that had been proposed as ongoing expenses and into one-time funding. Cherry defended the handling, pointing out that the Democrats have embraced one-shot funding as recently as the last regular legislative session.

“We have 117 days to have this discussion,” said Cherry, referring to the remainder of the legislative session.

The Trump effect

When setting the state’s revenue projections in December, Nevada’s Economic Forum acknowledged that some of Trump’s more grandiose campaign promises had the potential to significantly change the economic outlook.

Those concerns have not assuaged since his inauguration.

“Let’s take a step back,” said state Sen. Dina Neal, who chairs the Senate Revenue and Economic Development Committee. “We’re built on individuals coming to Nevada (and) spending their money. (If) they don’t spend, we don’t get the gaming money, we don’t get the sales tax money.”

Neal theorized that people may buckle down on spending “because they’re not understanding what is going to happen in this environment” and referenced Trump’s ongoing attempts to freeze spending on all federal loans and grants, mass firings and attempts to downsize federal employees, threats of broad tariffs against numerous countries, and promises of mass deportation.

“What we are seeing is fear,” Neal said, “and ultimately fear makes you say, ‘I need to keep the money that I have in the bank because I don’t know if i’m on the chopping block because my money is coming from a federal agent that no longer exists because they went through 10 to 15 agencies and arbitrarily chopped people’s salary.’”

Economic uncertainty will be acutely felt by Nevada, Neal argued.

“We are a boom and bust state,” she continued. “People who come here help us pay for our services. That’s kind of the model. Not even kind of. It’s 50% of it.”

Senate Minority Leader Robin Titus had a different take on the cause of state budget uncertainties.

“I think what has happened to our state is an unrealistic and unsustainable influx of taxpayers’ money over the last four years,” she said, referring to the billions in federal funds Nevada has received through legislation like the American Rescue Plan Act. “We warned folks that we were spending this money way too fast on unsustainable programs, that we were going to fall off a fiscal cliff, and now everybody is complaining that we are there.”

When Lombardo was inaugurated as governor two years ago he inherited a flush budget, much of which was the result of ARPA’s passage in 2021.

Titus also took issue with a suggestion that the governor consider establishing new ongoing revenue streams to fund the programs he is currently recommended be funded through one-time appropriations.

“We’re going to watch very closely,” she said. “We’re going to balance this budget. The money is there. All this conversation about ‘I want (you to guarantee) that you’ll find new funding.’ I think we find ways to spend less.”

The Nevada State Legislature meets for 120 days every other year. The 2025 Legislative Session began Monday and must end on June 2. Budget bills are typically among the last bills passed.

The Economic Forum is required by law to meet again on or before May 1. At that time the forum can revise its revenue projections, which would then have to be reflected in the budget passed by the Legislature and signed by the governor.

Potential Medicaid cuts

Lawmakers also noted the uncertainty being created by the upheaval in Washington could compromise not only the Nevada economy, but the flow of federal funds to Nevada.

State Sen. Rochelle Nguyen asked Cherry whether the governor’s office is working on any worst-case scenario contingency plans in the event of federal cuts to Medicaid. U.S. House Republicans are considering drastic cuts to Medicaid.

Approximately 800,000 Nevadans — 1 in 4 — are on Medicaid and the Children’s Health Insurance Program (CHIP).

More than 359,000 Nevadans are eligible through the Affordable Care Act’s Medicaid expansion, which Republican Gov. Brian Sandoval and the Democratic-controlled Legislature opted the state into in 2012.

Cherry said administrators have been asked to look into the possibility of cuts “but right now those (cuts) are speculative.”

He continued, “We have to build a budget that is within the confines of federal and state law. We are looking at the revenues that would come in under the programs as they are, but we are looking at those.”

Cherry acknowledged that his office and the Department of Health and Human Services received a letter earlier this week from Senate Democrats caucus leaders with questions about how several proposed changes might impact Nevada. The letter requested written responses be submitted by Feb. 18 and that someone from DHHS testify about the information to the Senate Health and Human Services committee and Senate Finance.

Nguyen, the vice chair of Senate Finance, said it’s important for the state to have a plan so “we are not scrambling to cut significant things if that was to be the case.”

Nevada Current is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Nevada Current maintains editorial independence. Contact Editor Hugh Jackson for questions: info@nevadacurrent.com.