Lawmakers making plans for spending

SANTA FE — With the start of a 30-day legislative session just one week away, a key House budget-writing committee started work Monday crafting a spending plan that would put an unprecedented New Mexico budget windfall to work.

During a hearing at the state Capitol, the top budget official in Gov. Michelle Lujan Grisham’s administration said the executive branch would let lawmakers take the lead on bringing forward a plan for spending unallocated funds the state received under the federal American Rescue Plan Act.

“At this point, I’m going to say the answer is ‘no,’” said Debbie Romero, the secretary of the Department of Finance and Administration, in response to a question about whether the Lujan Grisham administration would propose a plan of its own.

“We really are, given the past few months and what came out of the court hearing, relying to some extent on the Legislature,” Romero added. “But we hope there are going to be conversations about the use of those funds.”

In part, that was a reference to the fact the $1.7 billion the state received under the federal relief plan was the subject of a legal battle between the Governor’s Office and a bipartisan group of legislators last fall.

The state Supreme Court ultimately sided with the lawmakers in the dispute, ruling the Democratic governor could not spend roughly $1.1 billion in unallocated funds without legislative approval.

While some of the money was earmarked on road repairs, broadband expansion and other projects during a special session on redistricting last month, a legislative budget plan released last week calls for hefty spending in some other areas.

Among the big-ticket expenditures would be $150 million for a popular lottery scholarship program.

If approved, legislative officials say that would mean all tuition costs for higher education students who qualify for the scholarship would be covered for the next four or five years.

The legislative plan for one-time spending also includes $15 million for tourism advertising, $5 million for food banks and $150 million for hydrogen energy hubs, though that would be contingent on the passage of legislation establishing a legal framework for hydrogen energy development.

Some environmental groups have expressed opposition to the proposal, which is backed by Lujan Grisham’s administration, saying it could stall the development of renewable energy sources.

Camilla Feibelman, the director of the Rio Grande chapter of the Sierra Club, said the economic diversification plan lacks environmental safeguards.

“We hoped for an earthshot investment for the planet, but instead we have agencies without the resources to inspect and enforce environmental regulations,” Feibelman said in a statement.

In all, the plan released last week by the Legislative Finance Committee would authorize more than $2 billion in one-time expenses, with about half of that money coming from unspent federal relief funds and the rest from state tax dollars.

A top LFC official said Monday the hefty one-time spending would allow a separate increase in recurring state spending to be more specifically targeted.

Primarily, those targets would involve backfilling funding for existing programs like Medicaid to maintain current services and providing pay raises for teachers and state workers, whose ranks have been thinned during the COVID-19 pandemic.

“For this boom, some caution I would suggest is in order,” LFC Director David Abbey said during a meeting Monday of the House Appropriations and Finance Committee at the state Capitol.

While the Lujan Grisham administration is letting lawmakers take the lead on crafting a plan for spending the federal relief funds, the governor did release a budget plan that calls for recurring spending to rise to $8.4 billion during the fiscal year that starts in July.

The legislative budget plan also calls for year-after-year state spending to increase to record-high levels, and lawmakers will use the two plans as starting points as they work to build a new state budget during the session that starts Jan. 18.

“The overall spending levels are very close, but there will be a lot of detail work,” said Rep. Nathan Small, D-Las Cruces, during Monday’s meeting.