They can essentially allocate things as they see fit. There are statutory obligations that govts (mainly through councils) have to provide, such as waste collection, education etc so you couldn't cut all funding but within reasonable parameters the Welsh Govt is fit to allocate resources as they see fit.
That's why when the UK govt announces extra funding on some specific health initiative for example, they give a chunk of money to the devolved govts but it doesn't have to be spent on the same thing.