Gov. taps federal aid for jobless fund - Albuquerque Journal

Gov. taps federal aid for jobless fund

Gov. Michelle Lujan Grisham gestures during a news conference held June 11 at the Governor’s Office about changes to New Mexico’s Department of Workforce Solutions. The governor’s administration announced Tuesday it would direct more than $600 million in federal stimulus funds to bolster a largely depleted state unemployment fund. (Eddie Moore/Journal)

Copyright © 2021 Albuquerque Journal

SANTA FE – Gov. Michelle Lujan Grisham’s administration said Tuesday that it will target more than $656 million of federal stimulus money to replenish a New Mexico unemployment fund, which was all but drained by a deluge of pandemic-related claims for jobless benefits.

The governor’s announcement could set off a new showdown with the Legislature over spending authority, as some lawmakers have insisted they – not Lujan Grisham – should be the ones deciding how federal dollars are divvied up.

“Without question, I believe the Legislature needs to have a say in how that money is spent,” said Rep. Patricia Lundstrom, D-Gallup, chairwoman of the Legislative Finance Committee.

But Lundstrom and Sen. George Muñoz, D-Gallup, the LFC’s vice chairman, both said they support using some of the federal dollars to bolster the jobless fund in advance of a key date for setting business tax rates.

And Lundstrom described a recent meeting with top Governor’s Office staffers on plans for spending the federal stimulus dollars as productive.

New Mexico’s unemployment fund was largely depleted last year by the explosion of jobless claims, prompting the state to borrow $278 million from the federal government to continue paying benefits to unemployed workers.

While $100 million of that loan was recently repaid due to an appropriation included in a legislative spending bill, the use of roughly one-third of New Mexico’s $1.7 billion federal stimulus allocation will allow for the rest to be paid off.

In addition, the fund’s balance will be brought to about $460 million – or about same amount of money in the unemployment fund before the pandemic hit and jobless benefit claims skyrocketed from about 11,000 in March 2020 to more than 197,000 as of July of last year.

“Restoring the trust fund is essential to minimizing the impact that the pandemic will have on New Mexico businesses,” acting Workforce Solutions Secretary Ricky Serna said Tuesday.

The move to use federal stimulus dollars to replenish the unemployment fund comes after Lujan Grisham used her line-item veto authority in April to strike down a legislative proposal to earmark $600 million of the federal money to the fund, with a spokeswoman saying at the time that the action was necessary due to uncertainty over the federal guidelines for spending the dollars.

But the governor recently said the guidelines appear to allow states to spend federal stimulus dollars for such a purpose.

She also said it was important that businesses around the state that pay into the unemployment fund not face higher tax rates in the coming year due to the spike in jobless claims.

The statutory date for setting part of next year’s tax rate formula is Wednesday, and state officials said a low balance in the unemployment fund would have caused those rates to go up dramatically.

“We said we would replenish this fund – protecting those who are entitled to unemployment benefits now and in the future as well as protecting businesses across the state from any further pandemic-related harm – and we’ve done that,” Lujan Grisham said in a statement Tuesday, while announcing the Department of Workforce Solutions would be getting $656 million

While Muñoz said he agreed with the governor’s decision to bolster the unemployment fund, he said more money – perhaps an additional $400 million – could ultimately be needed to ensure it is not depleted again.

New Mexico’s unemployment rate has remained stubbornly high in recent months and was the nation’s second-highest at 8% in May, with only Hawaii having a higher jobless rate.

Meanwhile, some Republicans have criticized the governor for making unilateral spending decisions about the federal stimulus dollars.

“The governor continues to overstep her authority and take away the authority of our Legislature,” state GOP Chairman Steve Pearce said Tuesday. “She is acting in an authoritarian manner and refuses to accept the principle of checks and balances.”

But Lujan Grisham spokesman Tripp Stelnicki responded by saying the governor has invited top Republican lawmakers to meet with her about the federal stimulus dollars.

And Stelnicki blasted House Republicans, saying they lied in a news release about a “closed-door plan” to spend the money. He said the Governor’s Office has crafted no such plan.

In all, the state has paid out roughly $3.8 billion in jobless benefits during the pandemic – a figure that includes money made available under various federal relief packages.

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