The U.S. Treasury announced Monday the state of New Mexico will receive $1.75 billion in federal pandemic relief aid, part of an effort by President Joe Biden and Congress to help governments respond to the economic fallout from COVID-19 and position the nation for recovery.
Though the Treasury also released details on how the money can be spent, Gov. Michelle Lujan Grisham and legislative leaders remain in a stalemate over which branch of government has the authority to appropriate federal funds from the American Rescue Plan Act.
Last month, Lujan Grisham used her executive power to line-item veto over $1 billion in one-time expenditures for fiscal year 2022 from federal pandemic relief funds the state expected to receive. In her veto message, the Democratic governor said she considered the appropriations an impermissible attempt by the Legislature to control the allocation of federal funds, generating pushback from lawmakers on both sides of the aisle who have discussed the possibility of taking the governor to court to settle the long-unresolved issue.
“I firmly believe the Legislature is the appropriating body, and I firmly believe that this question needs to be answered,” Sen. George Muñoz, a Gallup Democrat who chairs the powerful Senate Finance Committee, said in a telephone interview.
“We need a determination so we have a final answer, so we know exactly what to do, so we’re not doing the dance and then suffering afterward,” he added. “We just need the question answered. Is it a black or is it white?”
A spokeswoman for the governor didn’t directly address the disagreement between the executive and legislative branches of government but wrote in an email the state is in the process of thoroughly reviewing the detailed guidance from the Treasury.
“From a top glance, we’re glad to be able to begin planning to allocate the federal funds to effective and impactful use benefitting New Mexicans across the state,” Nora Meyers Sackett, the governor’s press secretary, wrote in the email.
“The Unemployment Insurance fund remains a top priority, as does supplementing lost revenue for state agencies, in addition to focusing on behavioral health, broadband, and the recovery of economic drivers like the tourism and hospitality industry,” Sackett added. “The state is committed to distributing funds equitably and ensuring that the hardest hit communities receive the support they need.”
Muñoz agreed a deep dive into the Treasury Department’s guidelines should be the first order of business.
“Then we can really sit down to determine whether we have a case or don’t have a case,” he said.
The two branches of government are in agreement in some respects.
The Treasury guidance allows states to replenish unemployment trust funds to pre-pandemic levels, and both the governor and legislators have signaled an interest in using a large portion of relief funds to rebuild the state’s unemployment fund, which would then limit future increases in payroll taxes that underwrite unemployment insurance for the private sector.
“We know that these funds aren’t going to expire until 2024, so we want to make sure that they’re very targeted and they fix very targeted problems like the [unemployment] fund in New Mexico,” Muñoz said.
In a fact sheet about the $350 billion in Coronavirus State and Local Fiscal Recovery Funds, the Treasury Department said governments have “broad flexibility to decide how best to use this funding to meet the needs of their communities.” There are restrictions, such as funding debt service.
In New Mexico, the question over who has spending authority could lead to a standoff.
Muñoz and Rep. Patty Lundstrom, also a Gallup Democrat and chairwoman of the Legislative Finance Committee, wrote a letter to State Treasurer Tim Eichenberg last week saying state law requires the treasurer to credit all undesignated revenues to the general fund.
“We contend these ARPA [American Rescue Plan Act] state relief revenues should be deposited into the general fund and appropriated by the Legislature, and per your constitutional and statutory duties as Treasurer should ensure general fund revenue is not diverted or expended from the treasury without an appropriation from the Legislature,” they wrote.
“If the money is placed in the general, then the statute says the Legislature shall appropriate,” Muñoz said.
Lundstrom did not return a message seeking comment.
While the state has until 2024 to spend the money, the clock is already ticking.
Muñoz said the state received half of the $1.75 billion Monday. The remaining balance is expected in a year.
The state fared better than expected. New Mexico was expecting to receive $1.6 billion.
The Associated Press contributed to this report.