State frees up aid as cases hit 100

Panel directs $100 million for businesses during coronavirus outbreak

Medium-sized businesses in New Mexico will see some relief after the State Investment Council on Tuesday directed $100 million from a large endowment to help enterprises struggling to stay afloat amid the ongoing economic fallout from coronavirus prevention efforts.

Overseen by Gov. Michelle Lujan Grisham, the council directed a small portion of an estimated $24 billion investment portfolio to help struggling businesses. The money will be targeted toward companies with roughly 50 employees on the payroll and that make about $10 million to $15 million in annual revenue, according to Brian Birk, managing partner at Santa Fe-based venture capital firm Sun Mountain Capital. The company has managed the State Investment Council’s equity co-investments since 2006, according to Charles Wollmann, a spokesman for the council.

Birk answered questions from council members during a teleconference Tuesday morning and argued the money is necessary to help companies continue paying employees during the financial turmoil across the nation caused by the global spread of the new strain of coronavirus and business shutdowns

intended to halt the disease.

Lujan Grisham told fellow council members the money is meant to help ensure “that we’re doing everything we can to minimize or mitigate or redirect the real economic harm related to COVID-19,” the respiratory illness caused by the virus, and she reminded those on the teleconference that New Mexico is still waiting for Congress to approve a massive economic stimulus package that could also help struggling businesses.

In the meantime, the state economy is reeling from the impact of shutting down or severely restricting businesses in an effort to keep people isolated.

On Monday, the governor announced a more aggressive public health order shutting down all businesses not deemed essential services, including general retail that is not involved in distributing food, medical or pharmaceutical products.

The impact of such a severe restriction — while necessary to contain the coronavirus, the governor has said — likely will take a huge economic toll.

“I’m worried about those employees. I really want to think about those impacts. We will get a significant economic package out of the feds, and I wish I could tell you exactly what it will be,” Lujan Grisham said.

“We’re doing everything to create an opportunity for folks to have the resources they need to stay afloat and line up a new strategy to be viable,” the governor continued. “Because if we don’t do that, that part of the recovery … becomes nearly impossible, and we’re getting to that breaking point.”

The council unanimously approved the measure, which will divert money from the state’s $5 billion Severance Tax Permanent Fund, for economic recovery loans.

“I think we’ve all seen the need for this kind of financing,” said Sun Mountain’s Birk. “Many New Mexico businesses have been and will continue to be significantly impacted by coronavirus. And as revenues decrease, companies are finding themselves in a cash crunch.”

Some council members decried directing the money to companies in New Mexico that are headquartered out of state and suggested the $100 million is nowhere near enough to stem the rising economic storm to come.

“It’s going to be significant, and I would just say we don’t have enough money in the pot,” said former state Sen. Leonard Lee Rawson, a council member.

But using a larger portion of money from the severance tax fund or a much bigger endowment in the state’s $24 billion investment portfolio, the Land Grant Permanent Fund, would require a constitutional amendment, and thus take significantly more time even if there were political support for such a proposal.

State Rep. Javier Martinez has been fighting for years to put a measure on the ballot for voters to decide whether to change the state constitution and allow money from the Land Grant Permanent Fund to be used for early childhood services.

The state constitution directs that the Land Grant Permanent Fund can only be spent on certain state services, such as education. For that to change, whether the money is used for early childhood services or economic stimulus, two-thirds of the Legislature would have to approve the measure, followed by a majority of voters.

Martinez said he nonetheless supports the council’s decision to spend a small portion of the severance tax fund on businesses.

“The SIC’s swift decision also underscores the fact that we can act expeditiously and still make prudent investments,” he said in an email. “For 10 years, we’ve asked for 1% from the land grant fund for early childhood. As much support as our businesses need, so do our children, child care workers, and families. I look forward to continuing our push to invest in our children.”

House Minority Leader Jim Townsend, a Republican from Artesia, said in a statement that the state aid “highlights the economic emergency our state is facing and will hopefully provide some relief to New Mexico businesses, but the State Investment Council cannot remedy this crisis on their own.”

Townsend and other Republicans last week called for a special legislative session to address urgent impacts on the business community “as soon as possible,” according to a letter they sent to the governor.

House Minority Whip Rod Montoya, R-Farmington, said at the time a summer session — as House Speaker Brian Egolf suggested — is not soon enough. Although key Democratic leaders have said they need to wait to see what the federal stimulus package and economic damage will be before making budget revisions, Montoya called such a pause “a dereliction of duty.” Garcia, a spokesman for the caucus, later clarified in an email that Republicans understand the need to wait.

On Tuesday, they called on the governor to temporarily pause gross receipts taxes on New Mexico businesses for three months.

Rep. Jane Powdrell-Culbert, R-Corrales, delivered a letter to Lujan Grisham’s office making the request, which does not require approval from the Legislature, according to House Republicans.

“New Mexicans are counting on our government to help them through this crisis. If our government can carry some of that burden, then we must,” Powdrell-Culbert said in a statement.