SANTA FE – New Mexico’s Legislature is asserting its budgetary authority over $1.6 billion in new federal aid that dwarfs year-to-year spending adjustments, setting an agenda for economic recovery that Gov. Michelle Lujan Grisham could challenge with her veto pen.

Congress and President Joe Biden approved the $1.9 trillion relief package this month that funnels billions of dollars directly to New Mexico’s state government, school districts and local governments.

A state Senate finance committee quickly channeled about $1 billion of that economic relief to accounts and initiatives that avoid future payroll tax increases on businesses, underwrite college tuition for in-state students and backfill lost income at state museums and more.

A final budget bill approved by the legislature devotes federal relief of $600 million to replenishing the state’s unemployment trust fund. The fund began borrowing from the federal government last year to fulfill unprecedented unemployment claims.

Lawmakers earmarked another $6 million for the state fair in Albuquerque, along with $14.5 million to bolster spending at state parks, historic sites and New Mexico’s world-renowned public museum system. Those facilities were closed down for much of the past year as a health precaution against the pandemic, suspending income from admission fees.

The state’s lottery tuition fund is slated to receive $100 million that could make it cheaper if not tuition-free for thousands of residents to attend public colleges for years to come.

The scholarship, underwritten by lottery ticket sales, covered about $4,500 in tuition costs for New Mexicans in the current school year or about half the cost of attending the University of New Mexico. The award was 100% in the past.

Separately, the Legislature also boosted general fund spending on lottery scholarship payouts and the governor’s own supplementary “opportunity scholarship” program for college attendance free of tuition and fees.

Lujan Grisham says her office will taking a “hard look” at the Legislature’s priorities for spending federal relief. She has line-item veto authority to delete any provision of the Legislature’s budget bill.

“It’s premature to tell you what we’ll do,” the governor said regarding federal relief spending at a news conference Saturday at the close of the regular annual legislative session.

On the proposal to put federal aid toward student aid, the governor said “that may not be the best community effort, particularly since we got $18 million in opportunity scholarships in addition and $15 million in lottery scholarships” from the state’s annual general fund spending.

Some states are only beginning to sort out spending priorities for federal funds.

In neighboring Colorado, Gov. Jared Polis on Monday announced a statewide tour to hear from residents and gather ideas about how to spend the state’s $3.9 billion share of federal relief to the U.S. economy amid the coronavirus pandemic.

The new round of federal pandemic relief comes with fewer restrictions on spending by state and local governments as they cover increased expenditures, replenish lost revenue and mitigate economic harm from COVID-19. That can include investments in infrastructure or aid to households, businesses and nonprofits.

New Mexico would devote about $50 million to spending on Medicaid. Local enrollment has soared amid the pandemic in the federally subsidized health insurance plan for residents living in poverty or on the cusp.

The Legislature and Lujan Grisham shared major priorities in a budget bill that would increase state general fund spending to $7.45 billion for the fiscal year staring July 1. That’s a nearly 5% increase of $375 million over current fiscal year spending.