New legislation being proposed by Nevada Treasurer Zach Conine aims to close the wealth gap for the state’s poorest residents by throwing a lifeline to those in need of it most.
Assembly Bill 28 calls for $3,200 bonds to be issued to Nevadans whose birth was covered by Medicaid.
Dubbed as the Baby Bonds Bill, the bonds would mature on the individual’s 18th birthday—at a sum likely higher than the principal amount—and could be used for such purposes as tuition costs, a down payment on a house or covering costs to start a business.
If passed, the program would be open to any Nevadan born January 1, 2024, or onward who met the above requirements, said Conine, a Democrat.
An estimated $80 million would be needed to fund the program through the current biennium, and the program would be managed by the Office of the Treasurer.
“So much of generational wealth in our state and in our country comes through housing,” Conine said. “And for so long we have simply had a structure that has made it really easy for people like me to get access to that generational wealth, but not really easy for other people in our community to have that access. We’re trying to fix that.”
Conine said it’s an ideal time for the legislation because Nevada has the best credit rating in state history and its rainy-day budget is at its capacity.
The only other state in the U.S. with a baby bonds program is Connecticut, which passed its bill establishing the program last year.
“If we’re able to do it, we’re going to have a real moral obligation here to try and help individuals amongst us who have the least chance at success,” Conine said.
To be heard, the bill needs a co-sponsor in the Assembly Committee on Government Affairs.
In order to become law, it would need to be approved by both houses of the Legislature, which opened its session this month. While both chambers of the statehouse have a Democratic voting majority, in order to become law, the bill would also have to be signed by first-term Republican Gov. Joe Lombardo or secure a veto-proof majority in both legislative houses. Democrats have a supermajority in the Assembly but fall one vote short of that threshold in the state Senate.
Conine said he has heard some feedback on the bill and is optimistic it has at least some path forward. He noted that Lombardo urged lawmakers during his State of the State address to make the type of generational investments, akin to planting a tree now for the next generation to enjoy.
“Part of our work should be planting the trees that we’re never going to see come to full growth, and baby bonds are exactly that,” Conine said. “I think our friends in the Legislature that we’ve spoken to about it are generally supportive of figuring out big transformative ways we can make the state better. I’m hopeful that the governor will feel exactly the same way.”
Connecticut’s program, which according to the state’s website will cost more than $600 million to operate over the next 12 years, came from a similar desire to narrow the wealth gap, but also “spur long-term economic growth” for residents.
The hope is that the program will entice young families to stay in-state and help them accrue wealth by investing those funds into schooling or investment opportunities that will help the state as well, Conine said.
Coupled with existing social programs such as Millennium or Opportunity scholarships, beneficiaries of the baby bond could see serious long-term benefits, Conine said. And if the program truly lifts folks out of poverty, there should be less reliance on existing social programs.
“If a child is born, and their birth is paid for by Medicaid, they’re likely to stay on Medicaid throughout their childhood,” Conine said. “If they stay on Medicaid throughout their childhood, they’re likely to be on Medicaid and other social services into adulthood.
“If we are able to move a significant portion of this population out of generational poverty, the savings to the state, in the long term, are going to be exponentially larger than what the cost is.”
Officials in Connecticut estimate that roughly 15,600 residents born there each year—nearly half of all births—are born into poverty. Conine notes that the price tag for that program is much higher than what he’s proposing for Nevada, and about 44% of newborn Nevadans are below the poverty line.
If passed, the first recipients of the program would have bonds mature in 2042. And although the lawmakers currently in power likely won’t be in office then, Conine is hopeful his colleagues will find solace in seeing the next generation thrive because of investments made today.
“A lot of us who get to make these decisions won’t still be in office at that point because of term limits and other things, but we’re going to be able to see these kids have a better life and a chance at a better trajectory,” he said. “And that’s going to make the state better, not for just me or them. It’s going to make the state better for everyone.”
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