New Mexico needs better plan for federal funds
Commentary: Worried that federal spending was getting out of control, Sen. Everett Dirksen warned in 1973 that, “a billion here, and a billion there, and pretty soon you’re talking about real money.”
Dirksen’s quote seems quaint these days, in light of new spending passed or proposed by Congress to combat and counteract the impacts of the pandemic.
The American Rescue Plan Act of 2021, passed under former President Donald Trump, had $1.9 trillion in new federal spending. That was followed by the Coronavirus Aid, Relief and Economic Security, or CARES Act, passed under President Joe Biden, which has added another $2.2 trillion. And, Congress is in the process of whittling down a human infrastructure bill, now estimated at $1.2 trillion, to go along with a traditional infrastructure bill costing another $1.2 trillion, which has already been passed by the Senate.
I’ll leave it to economists to argue about impacts on inflation and the federal debt. But, there is no question that the new legislation has the potential to lift millions of Americans out of poverty. A study by the Center on Poverty and Social Policy at Columbia University estimated that the first bill alone would cut childhood poverty by more than half, from the current rate of 13.5 percent, all the way down to 5.7 percent.
New Mexico, which relies on federal support more than almost any other state, stands to benefit enormously from this new spending. And, it comes just as the state is trying to transition from an economy that is dependent on oil and gas revenue.
It is absolutely critical that our state has a solid plan in place to ensure this new funding is allocated in accordance with federal guidelines and reaches those who are most in need. A report issued last week by the state’s Legislative Finance Committee argues that there is no such plan in place, and the state is failing to comply with federal guidelines as a result.
In its first annual report to the federal government on COVID relief spending, the state failed to provide information in seven of the 11 required categories, according to the LFC. Those left blank included information on how the state would promote equitable outcomes, ensure fair labor practices or provide required performance data.
“While there are no apparent consequences for failed compliance, the public and the Legislature lack a clear plan from the executive for the use of these funds and how the executive proposes to ensure accountability and transparency,” the LFC report said.
There haven’t been many tough decisions yet on how to spend the federal money. Almost all of the $682.4 million in federal relief funds that the state has spent up to this point has gone to replenish the Unemployment Trust Fund and repay the federal government for loans made to the state to cover unemployment payments.
At the peak of the pandemic, nearly 200,000 workers in the state were receiving benefits. The trust fund has been depleted by nearly $4 billion, and needs to be made whole.
Spending decisions moving forward will become much more complicated.
Gov. Michelle Grisham has argued that she has sole authority to spend all federal money without going through the legislative process. That is being challenged in a lawsuit filed by two senators and pending before the state Supreme Court.
Regardless of how that lawsuit plays out, the governor and Legislature must work together to ensure this opportunity is not squandered.