New Mexico cities and counties have applied for nearly double the level of stimulus funding available for novel coronavirus-related expenses, meaning local governments hit hard by the pandemic will receive less than what they requested.
The administration of Gov. Michelle Lujan Grisham received 83 applications for local government grants totaling $191.7 million, higher than the $100 million in federal stimulus funding the state had set aside for that purpose, officials said Wednesday.
“We know that nobody is going to get 100 percent of what they requested. There’s no way,” acting Finance Secretary Debbie Romero told legislators. “It will be prorated so that everybody gets something.”
How state officials will dole out those funds became a topic of intense discussion during a Legislative Finance Committee meeting held in Red River. Numerous lawmakers expressed concern about the executive branch’s decision to include the enforcement of public health regulations as a criterion to receive federal funds.
Last month, the state sent application forms to local governments so they could request reimbursements for money they’ve spent responding to the pandemic. They also were able to request funds for small-business grants.
Local governments asked for funding for a wide range of coronavirus-related activities, such as senior meal programs, equipment upgrades, personal protective gear, equipment sanitization and housing assistance.
One of the criteria officials are using to score the applications is how cities and counties have enforced Lujan Grisham’s public health orders, such as a requirement to wear face coverings and a ban on mass gatherings.
On the application, cities and counties were asked how they’ve been affected by coronavirus-related shutdowns, how they’ve tried to mitigate the spread of the virus and how they’ve implemented the state’s health restrictions, among other questions.
Legislators on both sides of the aisle had much to say on the question of enforcement at Wednesday’s hearing.
“I fail to see, madame secretary, how an objective decision would be determined based on the question,” said Rep. Phelps Anderson, R-Roswell.
Sen. George Muñoz, D-Gallup, said he doesn’t believe state law gives local governments the authority to enforce the health orders. He then asked how state officials will determine whether a given municipality appropriately enforced the mandates.
“We’re going based on what the entity submitted in their application,” Romero responded. “So if they documented that they were doing enforcement, we’re trusting and we’re giving them points for doing enforcement. If they didn’t mention enforcement, then they don’t get any points.”
Sen. Clemente Sanchez, D-Grants, asked whether cities will be penalized for past actions, such as being involved in lawsuits related to the health orders.
Sanchez gave the example of Grants, which he represents and whose mayor was sued by the state after he refused to shut down businesses at the outset of the pandemic.
“There’s nothing political about these decisions,” Romero replied.
Rep. Randal Crowder, R-Clovis, said the state is putting too much emphasis on the issue of enforcement in making aid decisions and said city officials in his district have called him to ask why such questions were on the application.
“The municipalities that call me did not interpret it in the way you’re telling us today,” Crowder said.
Romero said the state is factoring enforcement into its aid decisions because local governments that enforced the public health orders had to spend more money to do so.
“We just know those communities that did enforcement have higher costs,” she said.
Local governments’ requests are being scored by state officials this week and will be prorated before final decisions are announced next week, Romero said.
The state has not yet determined whether it will distribute funds equally or based on the population of each entity; that decision will be made by the Governor’s Office, she said.
Meanwhile, the state received 66 applications for small-business grants, totaling $106.9 million, according to Romero. That’s more than double the allocated funding, as the state had set aside only $50 million in stimulus funding.
The small-business applications included requests for expenditures in areas such as employee wages, rent, personal protective gear and technological improvements. Local governments will administer the small-business grants.
Separately, the state already has approved $28 million in COVID-19-related stimulus funds for 21 tribes and pueblos in New Mexico, officials said.
Steve Kopelman, executive director of New Mexico Counties, said at the hearing it remains difficult to figure out exactly what the impact of the COVID-19 crisis will be on local governments.
“I think the bottom line is there’s so much uncertainty, there’s so much we don’t know, that it’s really, really hard to get a handle on how COVID is going to affect local governments,” Kopelman said.
Five or six counties in the state have seen an increase in gross receipts tax revenue during the pandemic because of long-term construction projects, while others have seen large decreases, he said.
For instance, the city of Santa Fe’s gross receipts distributions fell 19 percent in April and May compared with the same period last year, while Hobbs’ inflow dropped 24 percent during that time, according to a Legislative Finance Committee report.
The city of Santa Fe requested $25.1 million in stimulus aid, while Santa Fe County asked for $15 million.
Kopelman said the federal stimulus money the state plans to distribute will help local governments in the short term, but he remains concerned about their long-term outlook.
“The counties and the cities are really concerned about the effect on the small businesses,” Kopelman said. “It’s going to be very, very dire.”
Additionally, now that the federal government’s enhancements to unemployment benefits have been reduced, tax revenue taken in at the local level will likely drop further, said AJ Forte, executive director of the New Mexico Municipal League.
“We know with that unemployment falling off, we will see a drop at some point in that GRT,” Forte said. “That sugar high from the federal stimulus will fall off and our communities will be affected.”