Will Lujan Grisham veto federal funds?

Apr. 9—With just hours to sign the remaining bills on her desk, Gov. Michelle Lujan Grisham has yet to put her pen to the biggest one of all.

That's House Bill 2, the General Appropriations Act, which would provide $7.4 billion for New Mexico's 2022 fiscal year budget.

About $1.1 billion in this year's budget is based on federal funding that has not yet been formally appropriated, prompting some lawmakers to wonder if the governor will line-item veto some, if not many, big-ticket items in the budget.

"We built in the new federal funds into the budget, and the last time we did that, the governor vetoed those funds out," said Rep. Patty Lundstrom, D-Gallup and chairwoman of the House Appropriations and Finance Committee, one of the driving forces in the creation of the state budget.

Referring to the governor's decision during the first special session of 2020 to use her line-item veto power to erase legislative allocations of federal pandemic relief money, Lundstrom said she wonders "if she's going to follow the same process where she feels it wasn't in our wheelhouse to appropriate those dollars."

Tripp Stelnicki, communications director for Lujan Grisham, suggested Thursday that is possible.

"We'll have to see about that," he said.

The question is not whether those funds will come through but how states can use that money, he said.

Stelnicki said because the federal government has not provided guidance on how to spend those funds, appropriating them to specific programs could be "problematic."

Having that direction, he added, is key.

"We're still waiting on the feds to tell us exactly what we can do with those funds, so we don't want to tie our hands and find out we're in trouble later," he said.

The issue of whether the executive or legislative branch of state government should control federal dollars has been heightened this past year as states around the nation have found themselves increasingly dependent on federal money to help them through the COVID-19 crisis.

In Kentucky, Republican lawmakers who took issue with Gov. Andy Beshear's decision to oversee $1.5 billion in federal coronavirus relief funds last spring have since fought his efforts to determine what will happen with future American Rescue Plan funds.

In New Mexico, it's too late to do that — at least for now — as the deadline for the governor's signature on the budget bill fast approaches. By state law, she has 20 days following the end of the regular legislative session to act on the bill. Her deadline is noon Friday.

Lawmakers included much of the expected $1.6 billion in American Rescue Plan funds in this year's budget in an effort to fill in budget gaps and shore up programs and funds in need of help — including the state's unemployment insurance fund.

New Mexico has relied mostly on federal loans to keep that fund — which is almost $235 million in debt — afloat. Lawmakers appropriated $600 million in projected federal funding to that program during the session.

Sen. George Muñoz, D-Gallup and chairman of the Senate Finance Committee, said that if the governor vetoes the federal money for that fund, employers might see their own contributions to the unemployment program "soar through the roof."

Muñoz said he's "more than a little worried" that some of that federal money might be cut out of the budget, leaving funding holes in other programs.

More is at stake than just the unemployment fund. Another $100 million in federal money is earmarked for the state's lottery scholarship fund, which provides college tuition assistance for eligible New Mexican students.

About $200 million in relief funding is intended for the state's road system, while $20 million is targeted at the state's early childhood fund.

It's not clear if the governor could line-item veto part of the federal money, or, if she does, how the state would make up the planned appropriations.

Lundstrom said that if the governor decides to remove some of those funds from the state budget, she could wait until January to "show us how they want to put it into state agencies, whereas we had already done that in anticipation."

Sen. Craig Brandt, R-Rio Rancho, voted against HB 2 on the Senate floor but said Thursday he likes the idea of using projected federal dollars to help state programs in need.

He said that if Lujan Grisham does remove any of that funding, his concern is that "she will misspend it without any accountability," adding state lawmakers, not the governor, should have the final say over how to spend federal money.