An amended version of a spending bill passed both the full House and the House Appropriations and Finance Committee Friday which, if passed by the state Senate and signed by the governor, will appropriate $504 million of the $1.1 billion provided by the American Rescue Plan Act into state relief funds, state Rep. Nathan Small, D-Las Cruces said. The bill ultimately passed the House on a 65-1 vote, including changes made in a committee. Small, a co-sponsor of HB 2, introduced the amendment to the HAFC meeting Friday morning. He said the $504 million is slightly less than half of the total funds the state is transferring into a contingency account of the general fund. The $504 million would be expected to be made available to the agencies and is intended, based on federal guidelines, to provide relief due to losses incurred from the COVID-19 pandemic.
During a two-hour Senate Finance Committee hearing on HB 2, the committee learned of issues with the bill that will likely require change to the legislation. Department of Game and Fish Director, Michael Sloane, told the committee during the hearing that the department did not request the $5 million appropriated in the bill for property acquisition. He said the department is not currently considering any property acquisition projects. This led to concern among some committee members who brought up Bar L Ranch in Sandoval County, that the money was appropriated for that purchase but Sloane said any talk about the state purchasing that land was premature. Senate Finance Chair George Muñoz, D-Gallup, clarified how the appropriation happened by saying that the Legislative Finance Committee had reached out to the department but, he said, didn’t hear back.
The state Senate Finance Committee heard from two departments that will receive one-time funds of $35 million total if HB 2 passes. The state Senate Finance Committee did not take action on HB 2, as the bill still sits in the House Appropriations and Finance Committee which originally intended to meet Wednesday to vote on the bill. But state Rep. and HAFC Chair Patricia Lundstrom, D-Gallup, said during the House floor meeting Wednesday that HAFC would not meet that day. Lundstrom said on Tuesday that HB 2 needed some language cleanup, and appeared to be willing to consider a new appropriation to help the state’s chile farmers with the red chile harvest. HB 2 appropriates the federal American Rescue Plan Act money of $1.1 billion into a contingency fund of the state’s general fund.
The House Appropriations and Finance Committee held a three-hour hearing on allocating some of the $1.1 billion in federal pandemic relief aid but will wait until Wednesday to vote on the bill. HB 2, a general appropriations bill, will enable the legislature to begin spending some of the federal American Rescue Plan Act money. The 2021 Legislature already allocated the federal relief funds, but Gov. Michelle Lujan Grisham line item vetoed that portion of the spending bill last spring. A group of state senators from both parties sued Lujan Grisham arguing that she did not have the authority to spend the money without the Legislature’s input and won their case in state Supreme Court this past fall. Related: NM high court: Legislature, not governor, has authority over federal COVID-19 funds
Once it passes and is signed by the governor, the federal money will transfer to a contingency fund within the general fund.
After a contentious, two-hour debate over what should go into the bill to fund 2021’s second special legislative session, the House voted 65 to 1 to approve the $1.6 million package. The new House Majority Floor leader, Democratic state Rep. Javier Martinez, of Albuquerque, introduced HB 1, known as the feed bill, which ensures that the 2021 second special session legislative session can pay for itself. The legislative session, as called by Gov. Michelle Lujan Grisham, is focused on redrawing political maps and how to appropriate the rest of the $1.1 billion the state has received from the federal American Rescue Plan Act under Pres. Joe Biden. The bill originally included additional monies to go to the executive and judicial branches, to enable the Department of Finance and Administration (DFA) to prepare to spend the ARPA funds and money for the courts to pay for pretrial services. Martinez referred repeatedly to the crime problem in Albuquerque and that the DFA needed to get ready for the federal expenditures as reasons to pass a bill that was designed to allow the legislature to include the additional expenditures.
For most of this year, the budget was the hottest topic for legislators and the governor. Both branches battled, then came to an agreement no one seems enthusiastic about. The deal suggested by Gov. Susana Martinez essentially amounted to using bonding money normally reserved for state infrastructure to balance the budget. State lawmakers request the bonding money for state infrastructure projects. Issuing bonds works like a home mortgage: the state borrows money backed by oil and gas revenue and pays it back with interest over the years. Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the funding method “sets a poor precedent” while Senate Minority Leader Stuart Ingle, R-Portales, said he didn’t “like to do this either.”
And yet, the plan passed with a unanimous vote in the House of Representatives and just two dissenting votes in the Senate.
A framed newspaper clipping adorns the wall outside the office of New Mexico Senate Majority Leader Peter Wirth. The piece, dated May 25, 2002, serves as a reminder of the time when Republican Gov. Gary Johnson, who had vetoed 700 bills in six years, finally overplayed his hand. One of those vetoes was the $3.9 billion spending plan for the coming fiscal year, a 1.1 percent increase over the previous year. Johnson, a fiscal hawk, said the plan didn’t go far enough to control the growth of Medicaid. With just a few weeks left in the fiscal year, the Democratic Party-controlled House and Senate called themselves back to Santa Fe for a special session to override the veto and keep the government operating.
The latest update on the state’s budget situation was filled with negative news, including a large reduction from previous budget projections released in August. The current year’s budget is projected to be $69 million in the hole. For the fiscal year starting July 1, 2017, state budget experts project $300 million less money to spend than the budget in the current fiscal year—which itself saw massive cuts during the special session, with 5.5 percent cuts to most agencies. The update, presented by experts from the Department of Finance and Administration and the Taxation and Revenue Department Monday morning to the Legislative Finance Council, comes a month and a half before legislators go back to work during a regular legislative session to deal with next year’s state budget. During a special session in September and October, the Legislature plugged a $600 million budget deficit that encompassed last year’s budget and the current budget through a combination of tapping into reserves and making cuts.
The governor’s office contends a taxpayer-funded account used to host dignitaries and throw parties isn’t subject to open records laws to the same extent other public funds are. Sometimes the subject of controversy, the account catapulted into public view last winter when one of the parties its money was used for ended with police responding to noise complaints from a possibly intoxicated Martinez. Each year, the state Legislature grants $70,000 in taxpayer money to the governor for a contingency fund, which per state law she can use for “purposes connected with obligations of the office.”
The fund is unusual in that, unlike most state government accounts filled with public money, the state Legislature exempts it from required annual audits. But after NM Political Report filed an Inspection of Public Records Act request with the governor’s office this spring for six years worth of expense documents associated with the contingency fund, the office only provided broad summaries of the expenses. Missing were documentation like the checks, purchase orders, reimbursements and purchase requests associated with the fund that we asked for.
Legislators were told by the Legislative Finance Committee director Monday that the budget situation is still dire. “We’re on fumes,” LFC Director David Abbey told the Revenue Stabilization and Tax Policy Interim Committee. The legislators will have to deal with revenue that is down ten percent from last year, Abbey said. The state predicted a five percent drop in revenue. Abbey said a special session may be needed to address any shortfall.