Cathleen Allison, Associated Press
**CORRECTS SPELLING OF KELVIN ATKINSON'S NAME** Nevada Assembly Democrats, from left, Kelvin Atkinson, Debbie Smith, John Oceguera and Marcus Conklin answer questions during a news conference at the Legislature in Carson City, Nev., on Tuesday, Feb. 15, 2011. Smith announced a proposal that would allow Nevada school districts to use some bond reserve money to fund school improvement projects.

CARSON CITY, Nev. — Gov. Brian Sandoval swiftly denounced a bill Tuesday that would allow school districts to use bond reserve money to fund school improvements, saying it's a budget buster that would leave a gaping hole in his spending plan.

Sandoval proposed using bond reserve money in his State of the State speech in January. On Tuesday, Assembly Democrats unveiled a similar measure that would reduce from 12 months to six the amount districts are required to maintain in payment reserve accounts.

The difference is that Sandoval's plan would take $425 million out of reserves to fund school operations. The other bill being sponsored by Assemblywoman Debbie Smith, D-Sparks, would preserve that money that was approved by local voters for capital projects.

In a written statement, Sandoval said the Democrats' plan "leaves a $400 million hole in the state budget, taking additional money out of the classroom and teacher salaries."

"In these difficult financial times, the reserve funds proposed to be redirected for construction under this plan should instead be spent helping school districts focus on their central mission of education students."

Smith said her bill, called "School Works," would immediately free up $80 million for the Washoe County School District to make repairs to older schools and create jobs.

"These older schools will have access to money to be rehabilitated," she said at a news conference, adding that $80 million "can create a lot of work."

In Clark County, about $400 million would be diverted from the bond reserve account to operations under Sandoval's proposal. Clark County officials have expressed concern that taking money from the reserve account would require the district to refinance bonds, which could cost the district more and possibly jeopardize its credit rating.

Smith said her bill would provide Clark County with options.

"For Clark County, when the timing is right, they can make a fiscally prudent decision to use that money," she said.

Another bill to establish trade distribution hubs to attract manufacturing firms also was announced Tuesday at a news conference attended by Assembly Democratic leadership.

Both the schools bill, and the trade bill being touted by Assemblyman Kelvin Atkinson, D-North Las Vegas, will be heard Friday in the Assembly Government Affairs Committee.