A New Mexico judge is scheduled Thursday to consider arguments in a lawsuit challenging the state's universal childcare program, which aims to eliminate daycare costs for all working families regardless of income.

The lawsuit was brought by former Republican gubernatorial candidate Duke Rodriguez and other plaintiffs, who argue that Democratic Gov. Michelle Lujan Grisham's administration improperly eliminated income caps and co-pays for childcare assistance without legislative approval. Rodriguez, who lost his party's nomination in New Mexico's recent primary, called the program launch "executive overreach" and argued it was implemented unlawfully.

The state's childcare agency disputes these claims, arguing in court filings that lawmakers have since authorized and funded the expansion, making the lawsuit moot. Gov. Lujan Grisham signed legislation in February that enshrined the program into law, provided state finances remain healthy. District Judge Elaine Lujan could issue a ruling Thursday on whether the lawsuit can proceed.

The program expansion in November made New Mexico the first U.S. state to cover daycare costs for all working families regardless of income level. Previously, the state waived costs for families making up to 400% of the federal poverty rate, or roughly $132,000 per year for a family of four. The program is financed largely through revenue from oil and gas production in the state.

A potential pause to the program would affect thousands of New Mexican families who would again face daycare payments. Ilene Harding, who operates seven daycare centers in the Albuquerque area, said the expansion has increased enrollment and simplified billing processes, providing financial stability for her businesses.

Legislative analysts have raised questions about the program's sustainability, noting that the state Early Childhood Education and Care Department began overspending shortly after the November launch due to higher-than-expected enrollment. The case is being closely watched by policymakers nationwide as states from New York to California seek models to reduce childcare costs and expand public investment in early childhood programs.