Welfare reform in New Mexico was a legal and philosophical struggle between the executive and legislative branches of government. The Johnson administration started work on its welfare reform proposal before the federal government enacted the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The administration's first proposal included several "work first" requirements that the federal government was considering for federal welfare reform including a lifetime limit on receipt of cash benefits, job search requirements, and a limit on the amount of education and training a recipient could apply toward work requirements. Johnson's "work first" reform bill died in committee in early 1996.
The Johnson administration began implementing its reform package in October 1996 without the legislature's approval by using regulatory changes. The first measure to go into effect required welfare applicants to register for work with the state's Department of Labor. Additional requirements implemented by regulations in July 1997 include a three-year lifetime limit on the receipt of cash assistance, requiring recipients to be in a work activity within 60 days of receiving assistance, and new income eligibility requirements such as counting federal housing subsidies and the income of all household members, including those not in the assistance unit, when determining eligibility.
The legislature responded by passing welfare reform legislation that softened several of the measures scheduled to go into effect in July 1997. For example, the legislative proposal included a five-year lifetime limit on the receipt of benefits, instead of the administration's three-year limit, and gave recipients two years to find employment before participating in mandatory work activities or facing penalties. The legislature also tried to stop the administration's reform efforts by inserting language into budget bills that tied the state's $35 million general fund appropriation for welfare to passage of the legislature's welfare reform bill. Governor Johnson ultimately vetoed the legislature's proposals.
In late 1997, New Mexico's Supreme Court ruled in favor of three state legislators and others who argued that Governor Johnson violated the state Constitution's separation of powers provisions when he implemented his welfare reform policies without the legislature's consent. This ruling required the administration to suspend implementation of its reform regulations. The administration ultimately reverted back to the state's pre-TANF welfare program. This ruling was the catalyst that brought the governor and legislature to agree upon a reform package that was enacted in February 1998. This agreement looked much like the federal law. The executive and legislature's struggle over welfare reform did not end with passage of the 1998 act. It continued in the budget process where the legislature pursued expansions to the state's welfare benefits and spending, and the executive pursued fiscally conservative policies.
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