I hope this doesn't end up happening. It violates the end-to-end principle of networking that the Internet was founded on. They say that they are doing it to ensure that government communications stay within the borders of NV, but it looks like Switch (a large contributor to the campaigns of those sponsoring the bill) will be the main beneficiary as they own data centers in Las Vegas and Reno (soon).
If they wanted to keep communications secure, they should just require encryption when gov. officials communicate with one another.
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More stupid thing happen in politics. What else is new?
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If you send an email through say Outlook.com your message will have travelled half way around the world and back again by the time you see it in your 'Sent' folder. For better or for worse that's how the internet backbone has worked. Limiting your traffic inside your state doesn't help security much at all.
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That is pure and simple corporations paying politicians to create business for them at the expense of taxpayers. They get away with it by spinning it with security and preying on general ignorance of the population.