Correction: A previous version of this story included the wrong name for the federal American Rescue Plan Act. The story has been updated.
Copyright © 2021 Albuquerque Journal
SANTA FE – New Mexico’s Supreme Court sided Wednesday with a bipartisan group of senators in a dispute over spending authority for $1.7 billion in federal relief funds, barring Gov. Michelle Lujan Grisham from spending any more of the federal dollars without legislative approval.
The ruling, which was announced after the state’s highest court heard arguments from attorneys and deliberated for roughly one hour, clears the way for the Legislature to appropriate nearly $1.1 billion in allocated money received under the American Rescue Plan Act in the coming weeks – though the governor would have the ability to fully or partially veto any legislative spending plan.
Sen. Jacob Candelaria, D-Albuquerque, an attorney and one of the two senators who filed the court petition seeking to prevent Lujan Grisham from unilaterally spending the federal funds, called the ruling an affirmation of the Legislature’s power of the purse strings.
“For me, the day is a huge victory for the Constitution,” Candelaria told reporters shortly after the ruling. “The Legislature has the obligation and the duty to allocate these funds.”
He also said lawmakers could act on the unspent federal relief funds – intended to help states recover from the COVID-19 pandemic – during a special session on redistricting expected to be called next month or during a 30-day legislative session that starts in January.
However, it remains unclear whether the ruling will also apply to other federal programs that provide money to New Mexico. A written opinion detailing the full scope of the ruling and its implications on future disputes is expected to be issued in the coming days.
Shortly after the Supreme Court announced its ruling, Lujan Grisham said she was disappointed but pleased to have the legal clarity on how to move forward.
“It was a question, and now we have an answer,” the Democratic governor said in a response to reporters’ questions at the Capitol.
She said she would consult with legislators immediately on how quickly the money can be allocated and put to work. And she joked that lawmakers shouldn’t plan to go on vacation over the Thanksgiving and Christmas holidays.
“It means we have some extra work to do together,” Lujan Grisham said of lawmakers.
The most important takeaway, the governor said, is that New Mexico has a tremendous influx of money that can be put work improving the state.
“Look, I’m not going to let it rain on my parade,” she said of the decision.
Justices not swayed
During the Wednesday court hearing, the governor’s general counsel Holly Agajanian argued previous legal precedent supported Lujan Grisham’s handling of the relief funds.
The governor’s attorney also said it’s appropriate for the governor to exert authority over federal funds that are intended for specific purposes and can be clawed back by the federal government if certain deadlines and reporting requirements are not met.
But those arguments did not appear to sway justices, as Chief Justice Michael Vigil at one point asked Agajanian, “Didn’t you just rewrite the Constitution?”
Supreme Court Justice David Thomson was blunt in saying the Constitution makes clear the Legislature’s leading role in appropriating public funds.
“I learned that in second grade – they control the purse strings,” Thomson said.
The justices also appeared to grapple with how their ruling might impact spending decisions connected to future federal aid programs.
Meanwhile, the Supreme Court hearing featured the unusual sight of legislators appearing directly before the state’s highest court.
In addition to Candelaria, Sen. Daniel Ivey-Soto, D-Albuquerque, also argued before the court in support of the Legislature’s authority to appropriate public funds.
He was one of four Democratic senators – all chairmen of influential committees – who moved to intervene in the court case last week on the side of their fellow senators.
While the full scope of the ruling is not yet clear, it represented Lujan Grisham’s first legal setback in the state’s highest court.
Before Wednesday’s hearing, the Supreme Court had upheld the governor’s decision to bar indoor restaurant dining during the COVID-19 pandemic and also ruled that businesses negatively impacted by pandemic-related restrictions were not entitled to compensation from the state to cover their losses.
A tug-of-war
The Supreme Court case came after a protracted political spat between the Governor’s Office and some legislators on budgetary matters, including a surge in emergency state spending on COVID-19 tests, face masks and other supplies.
The tug-of-war intensified after Lujan Grisham used her line-item veto authority in April to strike down legislative earmarks for more than $1 billion in federal stimulus dollars from a state budget bill. The vetoed earmarks included funding for a state unemployment fund, a popular college scholarship program and highway repairs.
However, the governor announced in June her administration would target more than $656 million of the federal money to replenish the unemployment fund, which was all but drained by a deluge of pandemic-related claims for jobless benefits.
Lujan Grisham has also earmarked smaller amounts of the federal dollars for COVID-19 vaccine incentives and a temporary wage supplement for individuals working in New Mexico’s chile fields.
It’s unclear whether those spending decisions will be affected by the Supreme Court’s ruling, as the court challenge filed by Candelaria and Senate Republican floor leader Greg Baca of Belen focused on the roughly $1.1 billion of unallocated funds.
Baca, who attended the Wednesday court hearing but was forced to watch from a different courtroom after he declined to divulge his COVID-19 vaccine status, said he was glad that during a time of political polarization a bipartisan group of senators could come together on the court challenge.
“I’m excited to see the court side with the people and the Constitution,” Baca told reporters.
But he said it’s likely there will be partisan disagreements about how the money is ultimately spent, saying, “I can almost guarantee you we won’t agree on how it’s spent.”
