Commission on School Funding presents 10-year target; recommends sales-tax base expansion and property-tax reforms

Guy Hobbs, chair of Nevada's Commission on School Funding, presented the commission's findings to the Interim Finance CommitteeSubcommittee on Education Accountability, explaining the group's methodology for identifying an "optimal" funding target and the revenue options that could be used to reach it over a 10-year period.

The commission used the national average per-pupil figure as a proxy for "optimal" funding after verifying that independent subject-matter estimates closely matched that national number. Hobbs reported that the legislature's most recent per-pupil figure stood near $13,400, while the national average and an independent consultant's recommendation were both near $17,500 nd $17,600 respectively, producing a substantial multi-year shortfall. On a linear model the commission estimated incremental additional funding needs that would cumulatively total roughly $2.5 billion by year 10.

Revenue options: The presentation enumerated two broad fiscal paths that together could move the state toward the target: modernization of Nevada's sales/transaction-excise tax base and reforms to property-tax mechanics. On the sales side, Hobbs emphasized that Nevada currently taxes mostly tangible goods and that services now make up a majority of economic activity. The commission modeled adding portions of services (telecommunications, recreation, personal care, for example) to a transaction excise tax. Hobbs said that applying a transaction excise tax to an additional $13.3 billion in taxable trade at an illustrative rate would generate substantial state revenue; at a full 6.85% rate the commission's slide showed roughly $911 million per year from the expansion scenario.

On the property-tax side the commission highlighted that abatements and the depreciation method in Nevada materially reduce taxable values. Hobbs said statewide abated property tax totaled about $1.7 billion and that eliminating or phasing out abatements could raise several hundred million dollars per year, though he acknowledged political sensitivity and the mitigating impact of statutory rate caps. He also discussed possible changes to the assessment rate (currently 35%) and to how depreciation or market-value measures are used.

Hobbs repeatedly cautioned that changes to Nevada's fiscal architecture would be complex and constitutionally constrained; for example, he said 11 of the state's 17 counties are already at a combined statutory ad valorem cap described in state law at $3.66 per $100 of assessed valuation, which limits immediate property-rate increases in many counties. He recommended further deliberation and incremental approaches such as phasing and indexing to reduce abrupt impacts.

Committee members asked clarifying questions about the county cap, the share of property-tax revenue that goes to schools, and the commission's sales-tax modeling. Assemblymember Monroe Moreno asked whether the property-tax examples assumed all 17 counties could raise an incremental penny in the same way; Hobbs replied those slides were illustrative and noted the statutory cap and abatements can materially change outcomes.

Ending: The commission left the committee with a written report and slides for later consideration. Hobbs and staff said additional analysis and public conversation would be required before lawmakers could select specific revenue changes to implement.