Governor vetoes UI fund replenishment, saddles businesses with the bill

Governor vetoes UI fund replenishment, saddles businesses with the bill

  • Post published:April 13, 2021
  • Post category:News

Governor Michelle Lujan Grisham signed HB 2, The General Appropriations Act, on Friday which will provide $7.4 billion for New Mexico’s 2022 fiscal year budget. Normally this would be another run of the mill annual budget, but nothing has been “normal” since Covid upended every aspect of daily life for most Americans.

In the case of all capital expenditures, the Governor has the ability to line item veto specific parts of the budget plan that she deems unfit to be included in the annual budget. This year’s budget proposal included federal funding, to the tune of more than $1.5 billion, that was allocated to NM from the Biden administration’s $1.9 trillion covid relief plan. The Governor took particular issue with those funds being included in the budget, saying in an executive message to top-ranking lawmakers that legislators’ attempt to appropriate the funds were an infringement into her executive authority. She said a state Supreme Court ruling has upheld the Legislature’s power of the purse strings does not apply to federal dollars. 

This is highly problematic for many reasons. Namely, allowing one person to decide the fate of over $1.5 billion in federal funds that were allocated to the state for covid relief. Not only is this morally dubious, but it’s an affront to the structure of our very government which has always (until recently by the NM Supreme Court) upheld that the legislative branch is the keeper of the purse and should determine how funds are used. NMBC and Senator Jacob Candelaria spoke with KOAT news yesterday regarding the issue. “Every New Mexican has a stake in how this money should be spent,” said Sen. Jacob Candelaria “Why does the governor think she has all of the answers.”

The other serious concern about the Governor’s veto of those funds is what they were originally intended for in the budget: the UI fund. NM’s unemployment insurance (UI) fund was decimated by the pandemic, forcing the state to borrow from the Federal Government to make ends meet. To make up for this debt and replenish the fund, NM lawmakers had allocated $600 million of the $1.5 billion in federal money to fix the issue and keep the fund liquid. However, with that money now vetoed from the budget, the burden for replenishing the UI fund falls on NM businesses in the form of increased taxes. Businesses will be taxed at a higher rate to refill the UI fund for the next 3 years, even though they had no say in the layoffs that resulted from the pandemic. Even more concerning is that NM legislators passed a bill in the first special session specifically preventing that tax increase from happening, but businesses are seeing their rates increase anyways. 

NMBC emailed a letter, which was also signed by 9 other associations, to Secretary McCamley notifying him of the issues on February 16th and respectfully asking him to address this untenable situation which never would have occurred, if the law had been followed. Because we did not receive a substantive response from the Secretary and businesses are continuing to be charged inappropriately, the letter was sent to the Governor on March 25th asking for her help. Besides an acknowledgement of receipt, the Governor has not replied. NMBC will continue to monitor the situation and work toward a tenable solution for NM businesses. To read more and see NMBC’s latest on the issue click HERE.