NM cities and counties face looming deadline for unspent federal pandemic funds

SANTA FE — New Mexico cities and counties are facing a looming deadline to start putting unspent federal pandemic relief dollars to work.

Local governments face a Dec. 31 deadline to obligate, or take a binding step toward spending, about $171.6 million in federal funds.

That amount is what remains unspent of the roughly $701 million in local recovery funds New Mexico received under a federal law intended to bolster COVID-19 recovery efforts.

“It would be an absolute shame to lose this funding,” state Auditor Joseph Maestas said in a Tuesday interview, adding the funds can be used for a wide range of expenses including public health initiatives and infrastructure repairs.

“This is 100% federal funding that can provide funding for a variety of critical services,” he added.

Maestas also said his office would be auditing the spending of the federal relief funds to ensure they are appropriately spent.

As of last month, some New Mexico cities and counties had still not obligated much — or any — of the federal relief funds they received.

The towns of Texico, Roy, Reserve and Vaughn were among those that had not obligated any of the funding they were awarded, according to data compiled by the state Department of Finance and Administration.

However, some cities have already obligated all their federal relief funds. That includes Albuquerque, which has spent its entire $108.8 million allotment on expenses like police cars, building improvements and city employee hazard pay.

In addition, state agencies have expended or obligated nearly all of the $1.75 billion the state received under the federal American Rescue Plan Act.

The state’s remaining $3.8 million in unspent funds is in the process of being obligated in advance of the upcoming year-end deadline, DFA spokesman Henry Valdez told the Journal.

He also said there was “no reason to believe” the state would revert any of the federal pandemic funds it received.

Spending authority over the federal relief dollars led to a legal battle in 2021, as two New Mexico state senators filed a court petition seeking to prevent Gov. Michelle Lujan Grisham from unilaterally spending the federal funds.

The state Supreme Court ultimately sided with the lawmakers, and legislators subsequently used the funds to pay for statewide road repairs, broadband expansion, a wage boost for chile industry workers and construction of a new hospital in Valencia County.

The Lujan Grisham administration also used the funding to pay for a temporary increase in pay levels for early childhood workers.

Meanwhile, at least some of the delay in spending the federal pandemic funds could be due to rules guiding the spending of the funds that were rolled out gradually over the last three years.

In addition, some small municipalities in New Mexico received only modest allotments under the federal law, making it impossible to pursue costly projects or expenditures.

Under the final guidelines, cities and counties can use the federal dollars for personnel costs, including salaries and wages, but cannot use the money to fund new positions created after this year.

The American Rescue Plan Act signed into law by President Joe Biden in 2021 allowed for spending in four areas — pandemic-related public health and economic impact, premium pay for essential workers, revenue replacement and infrastructure improvements.

While the federal dollars received by states, cities and counties do not have to be spent until the end of 2026, Maestas urged local governments to not wait until then to do so. He specifically voiced concern that President-elect Donald Trump’s administration could seek to claw back some of the unspent funds from local governments around the country.

“I think it’s really important,” Maestas said. “I need to be sure these recipients are aware these deadlines are approaching.”