IN THE SUPREME COURT OF THE STATE OF NEW MEXICO 1

Opinion Number: 2

F iling Date: October 12, 2023 3

NO. S-1- SC

- 38996 4

STATE ex rel. JACOB R. CANDELARIA, in 5 his capacity as STATE SENATOR, and 6 GREGORY BACA, in his capacity as STATE 7 SENATOR, 8
Petitioners, 9

and 10

K

. J OSEPH CERVANTES, in his capacity a s 11 STATE SENATOR, DANIEL IVEY

- SOTO, in 12 his capacity as STATE SENATOR, GEOR GE 13 K. MU Ñ O Z, in his capacity as STATE 14 SENATOR, and GERALD ORTIZ Y PINO, in 15 his capacity as STATE SENATOR, 16

Intervenors -P etitioners, 17

v. 18
MICHELLE LUJAN GRISHAM, in her 19 capacity as GOVE R NOR, 20
Respondent, 21

and 22
TIM EICHENBERG, in his capacity as STATE 23 TREASURER, 24
Real Party i n Interest. 25 The slip opinion is the first version of an opinion released by the Chief Clerk of the Supreme Court. Once an opinion is selected for publication by the Court, it is assigned a vendor-neutral citation by the Chief Clerk for compliance with Rule 23-112 NMRA, authenticated and formally published. The slip opinion may contain deviations from the formal authenticated opinion.ORIGINAL PROCEEDING 1

Candelaria Law 2 Jacob R. Candelaria 3 Albuquerque, NM 4

Baca Law Offices 5 Gregory Baca 6 Las Lunas, NM 7

for Petitioners 8
K. Joseph Cervantes 9 Las Cruces, NM 10
Daniel A. Ivey

- Soto 11 Albuquerque, NM 12
George K. Mu ñ oz 13 Gallup, NM 14
Gerald Ortiz y Pino 15 Albuquerque, NM 16

Intervenors

- Petitioners , pro se 17

Office of the Gove r nor 18 Holly Agajanian
, Chief General Cou n sel 19 Kyle P. Duffy , Associate General Counsel 20 Maria S. Dudley, Associate General Counsel 21 Santa Fe, NM 22
for Respondent 23

L. Helen Bennett, P.C. 24 Linda Helen Bennett 25 Albuquerque, NM 26
for Real Party in Interest 27OPINION 1

VARGAS , Ju stice. 2

{1} The federal government, through the American Rescue Plan Act of 2021
, 3
provided approximately $1.75 billion in COVID

- 19

- related financial assistance to 4
New Mexico. This case presents a separation of powers question concerning whether 5
the legislative or executive branch controls the funds . Consistent with our writ of 6
mandamus issued November 18, 2021, we conclude that the authority lies with the 7
Legislature. 8

I. BACKGROUND 9

{2} In response to the challenges posed by the COVID

- 19 pandemic, the President 10
signed the American Rescue Plan Act of 2021 (ARPA) into law. Pub. L. No. 117

- 2, 11

135 Stat. 4 ( codified as amended in scattered sections of the U.S.C.)

. A mong other 12
things, this law established the Coronavirus State Fiscal Recovery Fund. 42 U.S.C. 13

§ 802; Coronavirus State & Loc. Fiscal Recovery Funds, Interim Final Rule , 86 Fed. 14

Reg. 26786

- 87 (May 17, 2021) (codified as amended at 31 C.F.R. pt. 35) . The funds 15
“are intended to provide support to State, local, and Tribal governments (together, 16
recipients) in responding to the impact of COVID

- 19 and in their efforts to contain 17

COVID

- 19 on their communities, residents, and businesses.” 86 Fed. Reg. at 26787. 182 {3} Of the $350 billion in COVID

- re lated financial assistance provided to eligible 1
recipients, id. at 26816, New Mexico received approximately $1.75 billion in ARPA 2
funds. The Legislature attempted to appropriate the ARPA funds through the 3
General Appropriation Act of 2021 , 2021 N.M. Laws, ch. 137, §§ 1

- 15

. In response, 4
Governor Michelle Lujan Grisham vetoed the portions that related to ARPA funds, 5

“ asserting that the Legislature

. . . lack[ed] the authority to direct the Executive’s 6

ad ministration of federal funds.” 7

{4} Prior to the commencemen t of this proceeding, the Governor spent 8
approximately $600 million of the $1.75 billion in ARPA funds received by New 9
Mexico, leaving approximately $1.08 billion to be distributed. Petitioners State 10
Senators Jacob R. Candelaria and Gregory Baca f iled suit against the Governor, 11
seeking a writ of mandamus prohibiting her from expen ding any additional ARPA 12

funds. Petitioners also requested a stay prohibiting the Governor and any official 13
under her control from “transferring, encumbering, committing, expending or 14
appropriating” any additional ARPA funds for the duration of these proceedings. 15
Petitioners limit their request for a writ to the remaining $1.08 billion in ARPA funds 16
and do not request relief related to the $600 million previously spent by the 17

Govern or. We denied the request for a stay and requested responses from the 18

Governor and from Tim Eichenberg
, New Mexico State Treasurer and real party in 193 interest in this proceeding. We also allowed the intervention of four additional state 1

senators. Following oral argument, we issued a prohibitory writ of mandamus and 2
an order providing that the Governor and State Treasurer “shall not transfer, 3
encumber, commit, expend, or appropriate any additional [ARPA] funds

. . . abs ent 4
legislative appropriation. ” This opinion explains the basis for that order. 5

II. DISCUSSION 6

{5} Before reaching the merits of Petitioners’ claims, we first consider two 7
preliminary matters: (1) whether Petitioners have standing and (2) whether a writ of 8
mandamus is the proper form of relief. 9

A. Standing 10

{6} Petitioners assert that they have standing on two separate grounds. First, they 11
contend that the dispute between the legislative and executive branches of 12
government confers standing as a matter of great public importance. Next, 13

Petitioner s assert that standing is proper by virtue of their positions as members of 14

the state senate. 15

{7} We need n ot reach the question of Petitioners’ standing based on their 16
membership in the state senate, as we conclude that this case presents a matter of 17

great pu blic importance. This Court has long recognized that we may, in our 18
discretion, “grant standing to private parties to vindicate the public interest in cases 194 presenting issues of great public importance.” State ex rel. Sego v. 1
Kirkpatrick, 1974

- NMSC

- 059, ¶ 7, 86 N.M. 359, 524 P.2d 975. Matters of 2

“great public importance” are those that involve “clear threats to the essential nature 3
of state government guaranteed to New Mexico citizens under their Constitution

— 4
a government in which the three distinct departm ents , legislative, executive, and 5
judicial, remain within the bounds of their constitutional powers.” State ex rel. Coll 6

v. Johnson, 1999

- NMSC

- 036, ¶ 21, 128 N.M. 154, 990 P.2d 1277 ( ellipsis, internal 7
quotation marks
, and citation omitted). In this instan ce, Petitioners’ claims require 8
us to decide the bounds of the constitutional powers of the legislative and executive 9
branches to spend federal funds. Such separation of powers claims present matters 10
of great public concern conferring standing on Petitione rs. See State ex rel. Clark v. 11

Johnson , 1995

- NMSC

- 048, ¶ 15, 120 N.M. 562, 904 P.2d 11 (concluding the claim 12
“that the Governor has exercised the state legislature’s authority” is a matter of 13
“great public interest and importance” conferring standing (inte rnal quotation marks 14
and citation omitted) ); N.M. Bldg. & Const r . Trades Council v. Dean , 2015

- NMSC

15
023, ¶ 7, 353 P.3d 1212 (“The balance and maintenance of governmental power is 16
of great public concern.” (internal quotation marks and citation omitted )). 175 B. Mandamus 1

{8} Having determined that Petitioners have standing, we next consider whether 2
a writ of mandamus is the proper method of relief. “Mandamus may be used either 3
to compel the performance of an affirmative act where the duty to perform the act is 4

cle arly enjoined by law, or it may be used in a prohibitory manner to prohibit 5

unconstitutional official action.” State ex rel. Riddle v. Oliver , 2021

- NMSC

- 018, 6

¶ 23, 487 P.3d 815 ( ellipsis, internal quotation marks
, and citation omitted). It is 7

well

- establis hed that “[w]e have

. . . original jurisdiction in mandamus in instances 8
where a petitioner [seeks] to restrain one branch of government from unduly 9
encroaching or interfering with the authority of another branch in violation of Article 10

III, Section 1 of o ur state constitution.” Unite New Mexico v. Oliver , 2019

- NMSC

11
009, ¶ 2, 438 P.3d 343 (internal quotation marks and citation omitted); see also 12

Riddle
, 2021

- NMSC

- 018, ¶ 23 (“Mandamus is often utilized to restrain one branch 13
of government from encroaching on the powers reserved to another branch.”). This 14
case presents precisely such an instance. Petitioners ask us to issue a prohibitory writ 15
restraining the Governor from encroaching on the authority of the legislative branch 16
to appropriate money under Article IV, Section 30 of the New Mexico Constitution, 17
which provides that “money shall be paid out of the treasury only upon 18
appropria tions made by the legislature.” Therefore, mandamus is proper. 196 C. ARPA I s Broad W ith Few Limitations 1

{9} ARPA provides four broad eli gible uses of federal funds provided to the 2

states: 3
(A) to respond to the public health emergency with respect to the 4 Coronavirus Disease 2019 (COVID

- 19) or its negative economic 5 impacts, including assistance to households, small businesses, and 6 nonprofit s, or aid to impacted industries such as tourism, travel, and 7 hospitality; 8
(B) to respond to workers performing essential work during the 9 COVID

- 19 public health emergency by providing premium pay to 10 eligible workers of the State, territory, or Tribal gover nment that are 11 performing such essential work, or by providing grants to eligible 12 employers that have eligible workers who perform essential work; 13
(C) for the provision of government services to the extent of the 14 reduction in revenue of such State, territo ry, or Tribal government due 15 to the COVID

- 19 public health emergency relative to revenues 16 collected in the most recent full fiscal year of the State, territory, or 17 Tribal government prior to the emergency; or 18
(D) to make necessary investments in water, sew er, or broadband 19 infrastructure. 207 42 U.S.C. § 802 (c)(1)(A)

- (D). 1 1

{10} All four categories allow state governments broad discretion to determine how 2
ARPA funds should be used. Indeed, the revenue loss provision is particularly 3
flexible because this category allo ws governments to replenish their general funds 4

as a result of a “reduction in revenue of such State

. . . government due to the 5

COVID

- 19 public health emergency.” Section 802 (c)(1)(C). If used to offset a 6

reduction in revenue due to COVID

- 19, the limitations on the state are minimal, 7
prohibiting only the use of the funds to offset tax cuts or to add to pension funds. 8

Section 802 (c)(2)(A)

- (B). Further, because ARPA does not lim it the percentage of 9
funds that may be allocated to a certain category, a state retains the discretion to 10

1 Unless otherwise specified, all references to 42 U.S.C. § 802 are to the 2021 version of ARPA in effect at the time we issued our writ of mandamus and accompanying order. After we issued the prohibitory writ in November 2021, Congress amended Section 802 to provide additional flexibility by adding an additional use categ ory aimed at “provid[ing] emergency relief from natural disasters or the negative economic impacts of natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.” Section 802(c)( 1)(E) (2022).8 deposit the entirety of the awarded funds into a single category. 2 The broad 1
discretion that states are given to determine how ARPA funds are used is also 2
evidenced by the lack of any guidance or requirements governing the process by 3

which states allocate these funds. 4

{11} The accompanying federal regulations reinforce the broad nature for which 5
ARPA funds can be used, setting out dozens of examples of elig ible uses within the 6
statutorily defined categories. See generally 31 C.F.R. § 35.6 (2021) . For example, 7
Category ( b )
, Public Health Emergency or Its Negative Economic Impacts, lists 8
twelve subcategories and twenty

- two sub

- subcategories of permissible uses

. 9

2 W e recognize that the 2022 amendment to ARPA Section 802 categories imposed minimal limitations on the percentage of funds that may be allocated to infrastructure projects, while other categories remain free from limitations. Compare § 802 (c )(5)(C)(i)(1)(aa)

- (bb) (2022) (limiting the amount of funding to be used on infrastructure projects to the greater of “$10,000,000; and

. . . 30 percent of such payment”)
, with § 802 (c)(1)(A)

- (B) (2022) (providing no limitation on the allocation of funds under these categories). This structure provides recipients with broad discretion to deposit all or significant portions of the awarded f unds into a single category and also to forego allocating any funds for o ther categories. Therefore, subsequent a mendments do not alter our conclusion.9 31 C.F.R. § 35.6(b) (2021)

. 3 Importantly, the regulations are silent as to how the 1
funds shall be distributed among the categories, subcategories, and sub

2
subcategories, thereby leaving significant discretion to each recipient. 3

{12} T he Interim Final Rule is sued by the Secretary of the Treasury, which 4
provides additional guidance to assist in the implementation of ARPA , reiterates the 5
federal government’s intention to give broad discretion to the states to use ARPA 6

funds . The Interim Final Rule explains that “recipients have considerable flexibility 7

to use [ ARPA funds ] to address the diverse needs of their communities.” Interim 8

Final Rule
, 86 Fed. Reg. at 26806. For example, the Interim Rule addressing the 9
category of public health and economic impacts, “ provi de s flexibility for recipients 10

to use payments

. . . for programs or services that are not identified on these non

11

exclusive lists but that fall under the terms of [ARPA] by responding to the COVID

12
19 public health emergency or its negative economic impact s.” Id. at 26788 13

3 As with ARPA, the federal government subsequently amended the federal regulations. The amended version of the regulations is equally as broad and therefore do es not alter our conclusion. See 31 C.F.R. § 35.6(b)(3)(i )(A)

- (D) (2022) (listing four subcategories of eligible uses to address public health impacts, each of which include an extensive list of eligible uses ranging from contact tracing to payroll expenses related to community policing strategies, reductions in gun violence, and “invest ing in technology and equipment ” ); i d. § 35.6(b)(3)(ii)(A)

- (E) ( encompassing five categories and sev enteen expansive subcategories of negative economic impacts for which ARPA funds can be used).10 (emphasis added). 4 T he broad nature of the statute and the accompanying rules 1
leaves to the states the responsibility to decide how best to use the ARPA funds

. 2

D. Separation of Powers 3

{13} T he flexible and broad nature of the funds raises the separation of powers 4
question before us today. To answer this question, we consider the constitutionally 5
defined powers of our legislative and executive branches, evaluating in particular 6
whether the ARPA funds are more properly administered by the Governo r or 7
appropriated by the Legislature. Article III, Section 1 of the New Mexico 8
Constitution provides: 9
The powers of the government of this state are divided into three 10 distinct departments, the legislative, executive and judicial, and no 11 person or collecti on of persons charged with the exercise of powers 12 properly belonging to one of these departments, shall exercise any 13 powers properly belonging to either of the others, except as in this 14 constitution otherwise expressly directed or permitted

. 15

4 The Final Rule, promulgated by the Department of Treasury after we issued our prohibitory writ of mandamus and order, provides even greater flexibility. 87 Fed. Reg. 4338 ( Jan. 2 7, 202 2 ) (codified at 31 C.F.R. pt. 35). In general, it “provides broader flexibility and greater simplicity” be yond the flexibility provided within the Interim Rule. Id

. at 4339

. For example, “the final rule provides a broader set of enumerated eligible uses.” Id

. Such uses include “making affordable housing, childcare, and early learning services eligible in all impacted communities and making certain community development and neighborhood revitalization activities eligible for disproportionately impacted communit ies.” Id

. Moreover, even if a recipient uses ARPA funds in a manner that is beyond what is specifically enumerated, such use is permitted so long as the recipient satisfies a standard process set out in the Final Rule. Id

. at 4339

- 40

.11 Article IV, Se ction 30 of the New Mexico Constitution reserves the power to 1
appropriate to the Legislature, requiring that “money shall be paid out of the treasury 2
only upon appropriations made by the legislature.” Article IV, Section 30 draws no 3

distinction between sta te and federal funds. The Governor, by contrast, is 4
empowered to “take care that the laws be faithfully e xecuted.” N.M. Const. art. V, 5

§ 4; see also State ex rel. Taylor v. Johnson , 1998

- NMSC

- 015, ¶ 22, 125 N.M. 343, 6
961 P.2d 768 (“A governor’s proper role is the execution of the laws

. ”). 7

{14} Notwithstanding the specific powers reserved to the legislative and executive 8
branches by our Constitution, we have recognized that “ the constitutional doctrine 9
of separation of powers allows some overlap in the exercise of governmental 10
function,” as “the absolute separation of governmental functions is neither desirable 11

nor realistic.” Clark , 1995

- NMSC

- 048, ¶ 32 (internal quotation marks and citation 12
omitted). Total compartmentalization and separation of functions between the 13
executive and legislative branches would result in a state of dysfunction. See id. 14
Even giving due weight to such overlap, however, “we have not been reluctant to 15
intervene when one branch of government unduly interfere[s] with or encroach[es] 16

on the authority or within the province of a coordinate branch of government.” Id

. 17
(internal quotation marks and citation omitted). Our approach is one of practicality 18
and common sense, which recognizes that “[a]lthough the executive, legislative
, and 1912 judicial po wers [set out in our Constitution] are not hermetically sealed, they are 1
nonetheless functionally identifiable one from another.” Id . ¶ 33 ( internal quotation 2

marks and citation omitted ). 3

{15} In this instance, we must determine whether the Governor’s authority to spend 4

the ARPA funds is a permissible overlap under the separation of powers doctrine, or 5
whether such an act would improperly infringe on the authority vested in the 6
Legislature. See id. ¶ 34 (“The Governor may not exercise power that as a matter of 7

s tate constitutional law infringes on the power properly belonging to the 8
legislature.”). To answer this question, we must determine “whether the Governor’s 9
action disrupts the proper balance between the executive and legislative branches.” 10

Id . Our assessme nt necessarily, 11
focuses on the extent to which the action by one branch prevents 12 another branch from accomplishing its constitutionally assigned 13 functions. Only where the potential for disruption is present must we 14 then determine whether that impact is justified by an ove rriding need to 15 promote objectives within the constitutional authority of [the 16 L egislature]. 17

Id . ¶ 34 ( brackets and internal quotation marks omitted) (quoting Nixon v. Adm’r of 18

Gen. Servs. , 433 U.S. 425, 443 (1977)). “One mark of undue disruption would be an 19
attempt to foreclose legislative action in areas where legislative authority is 20
undisputed.” Id . This approach strikes the appropriate balance between the 2113 coordinate branches of government, while giving the required “effect to Article III, 1

Section 1.” I d. ¶ 32. 2

{16} Petitioners contend that the Governor improperly encroached on the authority 3
of the Legislature because the ARPA funds were “made available to the state 4
generally,” and Congress did not designate them “for any specific state program or 5

state agen cy.” Because Congress did not specifically designate the funds, Petitioners 6
argue, the ARPA funds are public money subject to legislative appropriation under 7

Article IV, Section 30. The Governor responds that Sego , 1974

- NMSC

- 059, 8
established a categorical rule that the Legislature does not have authority to 9
appropriate fed eral funds in any circumstance. She further asserts that because the 10
funds are in a “suspense account” for funds that have not yet been earned pursuant 11

to NMSA 1978, Section 6

- 10

- 3(C) ( 201 1 ), they are not “in the state treasury” and 12
are therefore beyond the reach of the appropriation requirement of Article IV, 13

Section 30

. Alternatively, she invites the Court to conclude that she retains control 14

over the funds under a case

- by

- case approach d eveloped by the Colorado Supreme 15

Court. 16

{17} For the reasons outlined below, we do not agree that this Court’s holding in 17

Sego
, 1974

- NMSC

- 059, answer s the question presented by this case. Nor are we 18
persuaded that the type or location of the account where the ARPA funds have been 1914 deposited is dispositive of the right to allocate those funds. Finally, we decline the 1
Governor’s invitation to adopt a brigh t

- line rule that all federal funds fall outside the 2
purview of the Legislature’s power to appropriate. Instead, we adopt a more nuanced 3

case

- by

- case approach that considers the amount of discretion left to the states to 4
determine how best to expend federal funds. 5

E. Sego and Carruthers 6

{18} Relying on Sego , 1974

- NMSC

- 059, and State ex rel. Coll v. Carruthers , 1988

- 7

NMSC

- 057, 107 N.M. 439, 759 P.2d 1380, the Governor contends this Court has 8
already concluded that federal funds received by the State are properly admi nistered 9
by the executive branch , rather than appropriated by the Legislature. Those cases, 10
while informative, do not control the result of this proceeding. Further, our holding 11
today does not have any bearing on the validity of either Sego or Carruthers

. 12

{19} In Sego , we focused on the constitutional mandate giving boards of regents 13
“control and management” of the s tate’s higher educational institutions, Art. XI I , 14

§ 13, and the Legislature’s encroachment on that authority by trying to appropriate 15

and control t he expendit ure of funds granted or given to those institutions from 16

sourc es other than the state. 1974

- NMSC

- 059, ¶ ¶ 42

- 44, 51

. The dispute did not 17
involve a claim by the Governor that he had the power to administer those funds. 18
William Sego, a state senato r, sought a writ of mandamus commanding the Governor 1915 and other executive branch officials to “treat as nullities certain vetoes attempted by 1
the Governor” of legislation purporting to appropriate federal funds to institutions 2
of higher education in New Mex ico. Id. ¶¶ 1, 9, 41

- 51. Among the vetoes challenged 3
by Sego was a veto of legislation giving the department of finance and 4
administration authority to temporarily use excess funds appropriated to institutions 5
of higher education, which included, among oth er things, federal funds and “funds 6
in the form of scholarships, gifts, donations, private endowments or other gratuities 7

received from an outside source.” Id . ¶ 41. To determine whether the Legislature 8
was acting within the scope of its power, we considered “the authority of the 9
Legislature to appropriate and control non

- state funds available to these educational 10

institutions.” Id . ¶ 45. Relying on Article XII, Section 13 of the New Mexico 11

Constitution, we explaine d that the “ powers of control and management of each of 12

the se [affected] institutions is vested in a Board of Regents,” which support ed our 13
holding that the Legislature “has no power to appropriate and thereby endeavor to 14

control the manner and extent of t he use or expenditure of Federal funds made 15
available to our institutions of higher learning.” 5 Id. ¶¶ 49

- 51. Instead, the Court 16
concluded, “[c]ontrol over the expenditure of these funds rests with the Federal 17

5 Since Sego
, Article XII, Section 13 has been amended multiple times and this does not affect our analysis

.16 government and the Boards of Regents of the r espective institutions.” Id . ¶ 51. The 1

Sego Court did not consider the Governor’s authority to administer federal funds, as 2

it was not at issue in that case and it does not control the outcome of this proceeding

. 3

{20} In reaching its conclusion, Sego quoted wi th approval the Supreme Court of 4

Colorado’s opinion in MacManus v. Love , 499 P.2d 609 ( Colo. 1972)
, which “ held 5

‘ that federal contributions are not the subject of the appropriative power of the 6
legislature’ and the Legislature’s attempt to do so was

. . . void as an infringement 7
upon the executive function of administration.” Sego
, 1974

- NMSC

- 059, ¶ 50. The 8
Governor argues that our approval of the statement in MacManus supports the 9
conclusion that this Court intended to create a categorical ruling that all federal funds 10
are subject to the administration by the executive and not ap propriation by the 11
Legislature. Rather than announcing a categorical rule in Sego , however, we 12
specifically concluded that Article XII, Section 13 controlled the manner in which 13
the funds were spent and that the control over the funds at issue in that case “rest[ed] 14
with the Federal government and the Boards of Regents of the respective 15

institut ions.” Sego , 1974

- NMSC

- 059, ¶ 51. MacManus was quoted to support our 16

conclusion in Sego that the New Mexico Constitution provided a specific mandate 17
that boards of regents, and not the Legislature, were authorized to direct federal 18
funds received by instit utions of higher learning

. See id . ¶¶ 48

- 51. It did not establish 1917 a categorical rule regarding appropriation of federal funds. And, rather than give the 1

Governor exclusive control over the funds at issue in Sego , as she requests in this 2
proceeding, we conc luded that those funds were subject to the state constitutional 3
mandate set out in Article XII, Section 13, giving control and management to the 4
board of regents of each institution of higher learning. Id. 5

{21} Furthermore, i n the half

- century since MacManus wa s decided, Colorado case 6
law has evolved. Although the Supreme C ourt of Col o rado has acknowledged that 7
it stated “rather broadly [in MacManus ] t hat federal contributions are no t subject to 8
appropriations by the legislature,” it now recognizes that federal funds can be subject 9
to the legislative appropriation process

. See In re Interrogatories Submitted by Gen. 10
Assembly on House Bill 04

- 1098 , 88 P.3d 1196, 1203 (Colo. 2004) (rejecting the 11
broad holding in MacManus that federal funds are not subject to legislative 12
appropriation because “some funds deriving from the federal government are more 13
akin to state moneys, and therefore subject to legislative appropriation”). Having 14
examined the development of its own case l aw, Colorado has adopted a case

- by

- case 15
approach focused on the nature of the specific grant or appropriation before the 16

c ourt. 17

{22} We therefore de cline the Governor’s invitation to interpret this Court’s 18
holding in Sego as a broad categorical rule that all f ederal funds are beyond 1918 legislative appropriation. Sego did not consider expenditure of federal funds 1
generally, only those funds “made available to our institutions of higher learning,” 2

1974

- NMSC

- 059, ¶ 51, and we will not rely on Sego for a proposition t hat it did not 3

consider. See Dominguez v. State , 2015

- NMSC

- 014, ¶ 16, 348 P.3d 183 (“The 4
general rule is that cases are not authority for propositions not considered.” 5
(brackets, internal quotation marks, and citation omitted) ). 6

{23} Carruthers , likewise, does not support the Governor’s view that the 7
Legislature does not have authority to appropriate federal funds no matter the 8

circumstance. The Governor argues that, because we did not clarify in Carruthers 9
that our holding in Sego “was limited to institutions o f higher learning,” we “strongly 10
implied” that Sego created a categorical rule prohibiting legislative appropriation of 11

all federal f unds. As an initial matter, we disagree that Sego required clarification. 12

In Sego , 1974

- NMSC

- 059, ¶ 48 , we expressly stated that “[a]s to the authority of the 13
Legislature to appropriate non

- state funds available to the institutions of higher 14
learning, we are of the opinion that the Legislature lacks authority to appropriate 15
these funds or to control the use thereof through the power of appropriation.” Thus, 16

our limitation of Sego to “non

- state funds available to the institutions of higher 17
learning
, ” id.
, as opposed to all non

- state funds was clear. 1819 {24} Turning to Carruthers , the Legislature in that case appropriated funds through 1
the General Appropriation Act of 1988 , and the Governor vetoed several portions of 2
the legislation. 1988

- NMSC

- 057, ¶ 2. As relevant here, one portion of the legislation 3

at issue in Carruthers appropriated certain funds , which included federal funds
, for 4
data processing services. Id. ¶ 23. Although the Governor in Carruthers supported 5

his veto with some general reasoning that the Legislature cannot appropriate federal 6
funds, he did not attempt to veto the Legislature’s appropriation of federal fundin g. 7

Id. ¶ ¶ 23

- 24 (explaining that the Governor ’s objection was to the L egislature’s 8
mandate that the funds be used to purchase a specific system from a specific 9

contractor ). Instead, Carruthers confirms that Sego addressed the New Mexico 10

Constitution’ s part icular mandate that authorize s boards of regents, not the 11
Legislature, to direct federal funds received by institutions of higher learning. Id. 12

Therefore, the veto presented to this Court did not attempt to prohibit the Legislature 13
from appropriating any federal funds, but with a veto that prohibited the Legislature 14
from directing the specific system and specific contractor to be used. See id. 15

{25} To hold that the Legislature lacks the authority to appropriate federal funds 16
under any cir cumstance would contradict Carruthers , where we relied on Sego to 17
explain that “the legislature ‘has the power, and perhaps the duty, in appropriating 18
State monies to consider the availability of Federal funds for certain purposes.’” 1920 Carruthers , 1988

- NMSC

- 057, ¶ 23 (quoting Sego , 1974

- NMSC

- 059, ¶ 51). Instead, 1
this Court’s explanation in Carruthers aligns with our view that Sego focused on the 2

notion that the New Mexico Constitution provided a specific mandate that 3

authorized boards of regents, and not the Legislature, to direct federal funds received 4
by institutions of higher learning, rather than to establish a categorical rule regarding 5
appropriation of federal funds. See id. This reading is consistent with the remainder 6

of Carruthers where we stated that “[w]ith few exceptions, money shall be paid out 7
of the public treasury only upon appropriations made by the legislature.” Id. ¶ 5. 8
Because the power to appropriate rests with the Legislature , the Governor retains 9
“only a negative power to disapprove; it i s not the power to enact or create new 10
legislation.” Id. ¶ 6. 11

{26} The Court in Carruthers took issue with the Legislature placing improper 12
conditions on appropriations when it “limited the expenditure of appropriated funds 13
to a specific system and a specific contractor,” thereby eliminating the Governor’s 14
discretion to exercise his executive management function. Id. ¶ 24. (“We have 15
previously observed

. . . that conditions and restrictions on appropriations which 16
reserve to the legislature ‘powers of close sup ervision’ over the executive function 17
are not looked upon with favor.” (citation omitted) ). The Legislature’s conduct in 18
this regard fell outside the confines of “its traditional oversight and appropriation 1921 functions” because it left the Governor with out discretion to exercise his 1
management of the funds. Id . But we did not hold that the Legislature is without 2

aut hority to appropriate federal funds no matter the circumstance. Indeed, the 3
Legislature’s appropriation of federal funds in Carruthers remained intact. See id. 4

¶ 23 (retaining the Legislature’s appropriation of federal funds even after the veto 5

struck the provision placing specific contractor and system conditions on the 6
appropriation). This close examination of Carruthers cuts against the Governor’s 7

assertion that Carruthers created a bright

- line rule precluding legislative 8
appropriation of federal funds u nder any circumstances. Further, we decline to adopt 9
an approach that would categorically exclude the Legislature from ever 10
appropriating federal funds. Because neither Sego nor Carruthers answers the 11
question before us today, we look to the text of our Co nstitution and relevant statutes. 12

F. Constitutional and Statutory Framework to Appropriate and Administer 13 Money in the State’s Possession 14

{27} Our statutes and Constitution set forth the process for handling money 15

received on behalf of the state. Section 6

- 10

- 3 pr ovides that “[a]ll public money in 16
the custody or under the control of any state official or agency obtained or received 17
by any official or agency from any source

. . . shall be paid into the state treasury.” 18

And, “except interest or other payments on the public debt, money shall be paid out 19
of the treasury only upon appropriations made by the legislature.” N.M. Const. a rt. 2022 IV, § 30. The Legislature, however, has recognized that on occasion state officials 1
receive funds that are not currently and may never become public money. The 2
Legislature established a process to account for and administer funds on such 3
occasions where those funds are not yet property of the state. Section 6

- 10

- 3(C) 4
provides that 5

e very official or person in charge of any state agency re ceiving any 6 money

. . . which money has not yet been earned so as to become the 7 absolute property of the state, shall deliver or remit to the state treasury 8

. . . which money shall be deposited in a suspense account to the credit 9 of the proper official, person, board or bureau in charge of any state 10 agency so receiving the money. 11
“All unearned moneys deposited in a suspense account with the state treasurer

. . . 12

s hall, as soon as the same shall become the absolute property of the state of New 13
Mexico, be transferred out of said suspense account to the proper fund.” NMSA 14

1978, § 6

- 10

- 41 (1977). 15

{28} Petitioners contend that the ARPA funds are subject to legislative 16

approp riation because they are loc ated within the state treasury. In response, the 17
Governor contends that the funds fall outside the legislative appropriation 18
requirement because they are located in a suspense account within the treasury and 19
are subject to condi tions, including repayment if misused, such that the funds are not 20

the absolute property of the state. As explained later in further detail, we disagree 21
that the fund’s location within the treasury

— whether within a suspense account or 2223 the general fund

— is d ispositive or even relevant . However, we agree that the 1
limitations imposed on a state as a condition for receiving such funds from the 2
federal government are relevant. Conditions imposed by the federal government that 3
specify how funds are to be used do n ot require legislative appropriation and allow 4
the executive branch to simply execute the law by adhering to a federally pre

5
established purpose. By contrast, federal funds provided with a broad or 6
discretionary purpose such that they can be put to a varie ty of uses must be 7
appropriated by the Legislature . Because our Constitution and statutory scheme do 8
not appear to create a distinction between funds that are received from the federal 9
government and funds that are generated by the state, we look to approa ches adopted 10
in other states to assist us in our examination of what factors or conditions ultimately 11
determine which branch of government controls the funds. 12

G. Other States 13

{29} Other states have addressed similar separation of power questions by 14
considering the nature and purpose of the federal funds at issue. In determining 15

“ whether certain moneys fall under the powers of the legislative or executive 16
branch,” Colorado primarily examines “whether those moneys constitute general 17

s tate funds or custodial funds.” I n re Interrogatories , 88 P.3d at 1200. This 18

examination involves 1924 distinguish [ing] between funds akin to state moneys, which allow the 1 state broad flexibility in determining how such funds should be used, 2 and therefore become part of the state’s general fun d, and custodial 3 funds, which are to be used only in the manner specified and for the 4 purposes designated by the federal government. 5

Id. at 1202. 6

{30} Under this approach, Colorado has established that noncustodial funds are 7
subject to legislative appropriatio n, while custodial funds “fall outside the scope of 8
legislative authority and instead are subject to executive control.” Id. at 1202

- 03. 9
“[W]hen evaluating whether certain moneys constitute custodial funds,” Colorado 10
considers all circumstances regarding t he funds, including “the source of the funds, 11
the degree of flexibility afforded to the state as to the process by which the funds 12
should be allocated, and the degree of flexibility afforded to the state as to the funds’ 13
ultimate purposes.” Id. at 1202. 14

{31} Ok lahoma, like Colorado, distinguishes between custodial and noncustodial 15
funds when presented with a separation of powers issue. See Application of State ex 16
rel. Dep’t of Transp. , 1982 OK 36, ¶ 10, 646 P.2d 605, 609

- 10. However, Oklahoma 17
does not specifical ly rely on enumerated factors in assessing whether a fund will be 18
custodial, instead focusing on whether the federal funds are held in trust for a specific 19

purpose. See id. In applying this principle to grant

- in

- aid programs, the Supreme 20

Court of Oklahoma noted that “[f]ederal money deposited in the state treasury 2125 pursuant to some grant

- in

- aid program is held in trust for a specific purpose. Like 1
other custodial funds, it retains its original legal character. The legislature wields no 2
authority over such fu nds.” Id

. (footnote omitted). When these federal deposits take 3
place, the Legislature “may not subvert congressional policy by diverting the money 4
to another purpose.” Id. ¶ 10, at 610. 5

{32} The Massachusetts high court likewise recognizes that only certain federal 6

funds fall outside the Legislature’s power to appropriate. In assessing whether 7
federal funds are subject to appropriation or are merely held in trust, Massachusetts 8

focuses on whet her the federal funds “ are received by State officers or agencies 9
subject to the condition that they be used only for objects specified by Federal 10
statutes or regulations

. ” Opinion of the Justs. to the Senate , 378 N.E.2d 433 , 436 11
( Mass. 1978). When the fun ds are received with specific conditions attached, “the 12
money is impressed with a trust and is not subject to appropriation by the 13
Legislature.” Id. In that circumstance, “[t]he recipient of such funds has no choice 14
but to comply with the requirements impo sed by Federal law.” Id. The court 15
explained, however, that not all funds received from the federal government would 16

be held in trust. Id. Instead, “[f]ederal reimbursements may be made to a State 17
without conditions imposed as to expenditure.” Id. When thi s occurs, the “money 18
would be subject to the legislative power of appropriation.” Id. 1926 {33} W e glean from th e se cases that the answer to the separation of powers 1
question lies in a case

- by

- case examination of the amount of discretion that the 2
federal government affords to state recipients in spending federal funds. When the 3
funds come with specific conditions attached, the executive branch is merely 4
administering the funds consistent with the requirements established by the federal 5
government and no legislative appropriation is required. If a state retains wide 6
discretion, then such funds must be appropriated

— a function constitutionally 7

reserved for the Legislature

. 8

H. The ARPA Funds A re Subject to Legislative Appropriation 9

{34} Today, we adopt a totality of the circums tances approach to determine 10
whether the legislative or executive branch has the power to spend ARPA funds. T he 11
amount of discretion the federal government left to New Mexico in allocating the 12

ARPA funds compels us to conclude that they are subject to legi slative 13
appropriation. We base our conclusion on the language of ARPA, which includes 14
broad categories bestowing vast discretion on state recipients, as well as federal 15
regulations and rules reinforcing such flexibility through numerous categories and 16

subc ategories covering a wide array of eligible uses, even allowing recipients to 17
allocate funds to programs or services that are not explicitly enumerated as long as 18
they “meet the objectives” of the statute. U.S. Dept. of the Treasury, 2021 Interim 1927 Final Rul e: Frequently Asked Questions , Section 2.3 (2023)
, 1
https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf (last visited October 3
, 2
2023) . We reiterated in State ex rel. Smith v. Martinez that the “New Mexico 3
Constitution vests the power to appropriate money exclusively with the Legislature,” 4
and that “a law making an appropriation must ‘ distinctly specify the sum 5
appropriated and the object to which it is to be applied. ’ ” 2011

- NMSC

- 043, ¶ 4
, 15 0 6

N.M. 703, 265 P.3d 1276 (emphasis added) (citing N.M. Const. art. IV, § 16 ; quoting 7

N.M. Const. art. IV, § 30). The Governor, on the other hand, retains the power to 8

“ ‘ approve or disapprove any part or parts, item or items, of any bill appropriating 9

mone y

. . . . ’ ” Id. (quoting N.M. Const. art. IV, § 22 ). 10

{35} The number of eligible uses contained within ARPA is simply too broad to 11
allow the executive to administer or execute the funds without infringing on the 12
Legislature’s constitutional duty to appropriate . This broad flexibility embedded 13

within ARPA is evidence of significant discretion, such that the Governor, if she 14
were to control these funds, would not be able to allocate the funds through the mere 15

“execution” of the laws. See N.M. Const. art. V, § 4 ( empowering t he Gove rnor to 16
execute the law)

. Instead, the Governor would be required to exercise the 17
Legislature’ s constitutional prerogative to assess “ how, when, and for what purpose ” 18

the ARPA funds would be used. State ex rel. Schwartz v. Johnson
, 1995

- NMSC

- 1928 080, ¶ 14, 120 N.M. 820, 907 P.2d 1001 (internal quotation marks and citation 1
omitted) (“The legislature must exercise its exclusive power of deciding how, when, 2
and for what purpose the public funds shall be applied in carrying on the 3

government .” (internal quotation marks and citation omitted) ). 4

{36} For example, even if we focused solely on the first eligible use category

— 5
Public Health/Negative Economic Impacts

— the Governor would need to choose 6
between twelve subcategories and twenty

- two sub

- subcate gories of permissible uses 7
within that broad category. 31 C.F.R. § 35.6(b) (2021) . Alternatively, the Governor 8
could forego funding that category at all, instead focusing on the premium pay or 9
revenue loss categories. Or, at her discretion, the Governor co uld use ARPA funds 10
“for programs or services that are not identified on these non

- exclusive lists but that 11
fall under the terms of [ARPA] by responding to the COVID

- 19 public health 12
emergency or its negative economic impacts.” Interim Final Rule
, 86 Fed. R eg. at 13
26788 (emphasis added). 14

{37} If the Governor were to unilaterally control how ARPA funds are spent, she 15

would exceed her power to execute the laws and infringe on the Legislature’s 16
appropriation power

— a power that is constitutionally vested in the legis lative 17
branch by Article IV, Section 30. Clark , 1995

- NMSC

- 048, ¶ 34 (“The Governor 18
may not exercise power that as a matter of state constitutional law infringes on the 1929 power properly belonging to the legislature.”). Just as the Legislature did not have 1

t he authority to infringe on the “executive management function” in Carruthers
, 2

1988

- NMSC

- 057, ¶ 24, so
, too , the executive does not have the authority to intrude 3

on the Legislature’s exclusive authority to appropriate funds. This is a proper 4
balance of pow er between the coordinate branches of government. 5

{38} If the executive was allowed to unilaterally spend the ARPA funds absent 6
prior appropriation, it would “disrupt[] the proper balance between the executive and 7
legislative branches” because it is indisputa ble that the power to appropriate money 8
falls exclusively within the purview of the legislative branch. Clark , 1995

- NMSC

9
048, ¶ 34 ( “ One mark of undue disruption [of the proper balance between the 10
executive and legislative branches] would be an attempt to foreclose legislative 11
action in [an area] where legislative authority is undisputed.”); Smith , 2011

- NMSC

12
043, ¶ 4 ( explaining that our Constitution vests appropriation power with the 13
Legislature ). We cannot allow such an unconstitutional infringement on th e 14
legislative branch of government. 15

I. Suspense Funds 16

{39} In an attempt to avoid such infringement, the Governor contends that the 17
ARPA funds are “properly held in a suspense account pursuant to” Sections 6

- 10

- 18
3(C) and 6

- 10

- 41 because the funds “ha[ve] not yet be en earned so as to become 1930 absolute property of the state.” The Governor reasons that because the funds are held 1
in suspense, they “do not implicate Article IV, Section 30’s appropriation 2
requirement because they fall outside of the state treasury.” The Gov ernor submitted 3
an affidavit from the Secretary for the New Mexico Department of Finance and 4
Administration (DFA), who affirmed that the ARPA f unds are in a suspense account. 5

She also affirmed that she is responsible for the DFA’s exercise of its statutory 6
authority to make disbursements from accounts maintained by the Treasurer’s office, 7
including from those f unds held in suspense accounts. According to her affidavit, 8
the ARPA funds were deposi ted into suspense accounts, coded as “unearned 9

revenue,” and treated as liabilities instea d of assets for audit purposes. 10

{40} Upon close examination, we conclude that Section 6

- 10

- 3 is an accounting 11
provision that does not remove the ARPA funds from the treasu ry or impact the 12
constitutional separation of powers analysis that we must engage in when we are 13
assessing whether it is the legislative or the executive branch that controls the funds 14
at issue. For this reason, we decline to allow coding procedures for au diting or 15
accounting purposes to subvert or determine the branch of government authorized 16
to appropriate funds when our Constitution explicitly provides that “money shall be 17
paid out of the treasury only upon appropriations made by the legislature.” N.M. 18

C onst. art. IV, § 30. 1931 J. Funds Held in Suspense Accounts Become the Property of the State 1 Be fore They A re Spent 2

{41} Even assuming that the use of a suspense account should control which branch 3
of government has the power to spend the ARPA funds, at oral argument t he 4
Governor advanced that the ARPA funds are not earned until the funds are “spent, 5
reported, and approved b y the federal government.” Counsel for the Governor 6
argued, “If [the funds are] unearned, [the funds] should not be in the state treasury 7

and theref ore [are not] subject to appropriation pursuant to Article IV, S ection 30.” 8

{42} We are unconvinced. Once state moneys are “earned so as to become the 9
absolute property of the state” under Section 6

- 10

- 3(C), the moneys shall “be 10
transferred out of said suspense account to the proper fund.” Section 6

- 10

- 41. 11
Fundamentally, a suspense account is a temporary holding account where the funds 12
are placed while a decision is being made as to their classification. See Black ’ s Law 13

Dictionary , 24 (11th ed. 2019) (defining a suspense account as a “temporary record 14
used in bookkeeping to track receipts and disbursements of an uncertain nature until 15
they are identified and posted in the appropriate ledgers and journals”). If the 16
predicate has been satisfied, the funds must, by statute, be trans ferred into “ the 17
proper fund.” Section 6

- 10

- 41. Therefore, the Governor’s argument that the ARPA 18
funds are not earned until they are spent is unpersuasive because the funds must be 1932 transferred from the suspense account into the proper fund before they are spent

— 1

not after. 2

III. CONCLUSION 3

{43} For the foregoing reasons, we hold that the ARPA funds are subject to 4
legislative appropriation and so have granted a prohibitory writ of mandamus that 5
Governor Michelle Lujan Grisham and State Treasurer Tim Eichenberg shall no t 6

“ transfer, encumber, commit, expend, or appropri ate any additional [ARPA] 7

funds

. . . abs ent legislative appropriation.” 8

{44} IT IS SO ORDERED. 9

10 JULIE J. VARGAS , Justice 11

WE CONCUR: 12

13 C. SHANNON BACON , Chief Justice 14

15 MICHAEL E. VIGIL , Justice 16

17 DAVID K. THOMSON , Justice 18

19 BRIANA H. ZAMORA , Justice 20