FEDERAL STIMULUS: Unemployment Fund Should Be First to Benefit from Flexibility

The next round of federal stimulus money – a cool $1.75 billion set to be deposited in New Mexico accounts this month – could have broad and flexible allowable uses, according to an Albuquerque Journal article this week.

The state Legislature and Governor Michelle Lujan Grisham may still disagree over who has the authority to spend the money, but if it were up to us, we know exactly what we’d do with it.

You might recall the fiery indignation that erupted when the Governor vetoed legislative appropriations of expected federal funding, on the grounds that, pending formal federal guidance, the expenditures might not be legal. We were especially disappointed that one of the largest vetoes was a $600 million infusion of the state’s Unemployment Insurance Trust Fund, and it’s time to make that right.

Over the course of the COVID-19 pandemic, our once-solvent UI Fund went broke and then some, thanks to federal loans that supported tens of thousands of New Mexicans who lost their jobs. But it was a loan, not a grant, and someone has to pay up. During the session, the Legislature dedicated $300 million of state General Fund money to enable continued payments that don’t contribute to our debt, but we’re still in the hole. If the state doesn’t act to wipe out that debt, that burden will be on our businesses before they’ve even had a chance to fully recover. Their unemployment insurance rates will go up – precipitously – and, after the year they’ve had, it might be enough to make them finally call it quits.

If this happens, the biggest shame of all will be that the situation could have been avoided.

Now that we know exactly how much funding we’ll receive and the ground rules for using it, our state’s leaders should act swiftly to make the UI Fund and its solvency their top priority. Whether it’s an executive order or another special session, our businesses don’t care which government branch’s seal is on the authorization of the funding, but they do depend on action.

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