Julie Jacobson, Associated Press
In this March, 20, 2014, file photo, Nevada governor Brian Sandoval speaks during a news conference.

CARSON CITY, Nev. — Gov. Brian Sandoval on Thursday proposed hundreds of millions of dollars in new taxes as part of two-year, $7.3 billion budget that would address a looming deficit while dramatically increasing state spending on public schools, colleges and universities by nearly $900 million to make significant improvements in education he says are long overdue.

The moderate Republican elected to a second-term in a landslide in November said in his State of the State address Thursday night that Nevada's economy is steadily growing and diversifying after suffering through the Great Recession, but still has many challenges ahead.

Sandoval is asking the Legislature controlled by the GOP for the first time in 20 years to approve about $1.14 billion in additional revenue, much of it through a variety of taxes on businesses, including mining companies and casinos, as well as increasing the state cigarette tax from 80 cents to $1.20 a pack.

His overall education package for pre-kindergarten through 12 would increase spending $782 million over the two years, including more than doubling current spending levels to $150 million to implement full-day kindergarten statewide. He also recommends new programs targeting the poorest schools and those with the most students learning English, as well as those who are gifted and talented.

An additional $100 million in new spending is aimed at higher education to help provide the highly skilled workers needed for future economic growth.

"I am therefore proposing a broad-based solution that asks Nevada business to invest in our education system," Sandoval said in a 55-minute speech interrupted numerous times by standing ovations in the Assembly chambers where both houses gathered.

"I realize these decisions are difficult. I know I am asking a lot from the business community," he said. "But I have explored every option and find this to be the broadest, least complicated and fairest solution."

The tax plan drew anticipated criticism from the most conservative Republicans.

"I don't think the people have an appetite for taxes," said Assemblywoman Victoria Seaman, R-Las Vegas.

But leaders of both parties signaled a willingness to try to find common ground.

"For far too long, our 'leaders' have elected to accept the status quo rather than face head-on the difficult issues facing our state," Senate Majority Leader Michael Roberson, R-Henderson said. "Gov. Sandoval is providing the courageous leadership that so many Nevadans have longed for."

Assembly Minority Leader Marilyn Kirkpatrick, D-Las Vegas, agreed.

"In Carson City, we've gotten used to just not getting the job done because we refuse to make the hard choices — on both sides of the aisle," she said. "Our work will require give and take on all sides."

Nearly half of the additional revenue the governor is proposing would be raised by extending a series of "sunset" taxes that otherwise are scheduled to expire in June 30 — roughly $580 million.

"It's time we are honest with ourselves — these revenues are now part of our comprehensive budget," Sandoval said.

The biggest chunk of the new money, about $437 million, would be generated through higher business license fees on a sliding scale that would cost the smallest businesses about $400 a year and the biggest up to $4 million a year. Currently, all business licenses cost $200 annually, regardless of whether they are for a hot dog stand or hotel-casino.

Sandoval says his budget blueprint would fill what is expected to be about a $170 million deficit when lawmakers gather Feb. 2 for a 120-day session.

He will have to sell the idea to anti-tax conservatives as well as Democrats historically reluctant to embrace some of the school overhauls he's proposing, including potentially subjecting persistently under-achieving schools to a new system free of collective bargaining requirements.

"While many must recognize the hard truth that our education system will not improve without more funding, others must accept the reality that improvements will not be made without accountability measures, collective bargaining reform and school choice," he said.

His biggest challenge likely will be pushing the package through the Assembly, where Republican infighting has already triggered a power struggle between the most conservative and more moderate members of the party. He appealed to members of both parties to have the "courage" to "rise above that which seems easy."

Assistant Senate Majority Leader Ben Kieckhefer, R-Reno, said Sandoval should be applauded "for ignoring personal risk and proposing a bold new revenue plan."

"Academic excellence doesn't come free," he said.

Kirkpatrick said the budget they end up enacting must recognize that "currently not everyone is sharing in the state's recovery."

"The glimmering lights of the Las Vegas strip may still be on, but in the shadows of those buildings are people living with constant insecurity," she said.