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Budget earmarks federal stimulus funds

Copyright © 2021 Albuquerque Journal

SANTA FE – A $7.4 billion budget plan awaiting final approval on Gov. Michelle Lujan Grisham’s desk isn’t just a spending blueprint for state dollars.

It also appropriates more than $1 billion from a just-approved federal stimulus plan for various state programs – a largely depleted state unemployment fund, a popular college scholarship program, road repairs and an economic development fund used to offset the costs of business expansion and relocation.

Although the governor recently said she plans to scrutinize the budget, the earmarks could set up a tug of war between the governor and the Legislature.

During a news conference after the 60-day legislative session ended Saturday, Lujan Griaham said there was broad agreement between lawmakers and her office that federal funds should be spent on infrastructure, broadband, education and aid for small business.

But she expressed misgivings about at least some of the proposed earmarks and could use her line-item veto authority to strike them down.

“We want to make sure … we absolutely agree the priorities are right in the budget package,” the governor told reporters.

“It’s premature to tell you what we’ll do,” Lujan Grisham said later.

In all, roughly $9 billion could be flowing into New Mexico under the federal American Rescue Plan aimed at helping solidify and bolster the nation’s economy amid the COVID-19 pandemic.

But most of that money will flow directly to tribal governments, school districts and New Mexico residents, who are receiving $1,400 stimulus payments.

New Mexico’s state government is getting $1.6 billion and slightly more than $1 billion of that amount would be earmarked for specific causes under the budget bill awaiting the governor’s approval.

The remaining federal funds would likely stay in a state savings account until they are appropriated by the Legislature, though it’s possible Lujan Grisham could access the money through an emergency declaration.

As part of New Mexico’s pandemic response, lawmakers and the Governor’s Office have at times disagreed about control over federal dollars.

In June 2020, Lujan Grisham used her line-item veto authority to strike down some legislative budget language on federal pandemic relief spending, arguing that it was the executive branch’s job – not the Legislature’s – to direct the spending of such funds.

But some lawmakers have insisted it’s the Legislature’s job to make spending decisions, and lawmakers did reallocate some federal funds from a previous stimulus package during a special session in the fall.

Sen. George Muñoz, D-Gallup, chairman of the Senate Finance Committee, said the $1 billion-plus in federal funding earmarks were added to the state spending bill late in this year’s 60-day session after President Joe Biden signed the federal stimulus plan on March 11.

He said the earmarks were largely intended to ensure the money was not spent on new initiatives or programs that could go unfunded in future years, if revenue levels decline.

“What we’re concerned about is, how do you make money last?” Muñoz said Monday.

He also said there was agreement among Senate Democrats on the ultimate spending targets.

Specifically, the federal stimulus fund appropriations in the state budget bill include:

• $600 million for the state’s unemployment fund, whichwas depleted last year due to a spike in state jobless claims.

• $200 million for road repairs over the next three years, in addition to $300 million in state funds for road repairs and construction.

• $100 million for a state “closing fund” used to catalyze economic development in cooperation with local governments.

• $100 million for a state lottery scholarship fund that pays tuition expenses for qualifying higher education students.

In addition, the budget bill would authorize that federal funding supplant nearly $85 million in proposed state spending on broadband infrastructure and planning efforts.

Lujan Grisham has until April 9 to act on the budget bill, along with other legislation passed during the final days of this year’s session.

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