The attorneys general take issue with a $350 billion pot of money set aside under the stimulus to help cash-strapped cities, counties and states pay for the costs of the pandemic. Congressional lawmakers opted to restrict states from tapping these federal dollars to finance local tax cuts.
Lawmakers included the provision to ensure Washington isn’t footing the bill on behalf of states that later take deliberate steps to reduce their revenue. But the guardrails frustrated many Republican leaders, who said in a letter to the Treasury Department that the law’s vague wording threatens to interfere with states in good financial standing that sought to provide “such tax relief with or without the prospect of COVID-19 relief funds.”
The attorneys general from Arizona, Georgia, West Virginia and 18 other states called on the Biden administration to make it clear that they can proceed with some of their plans to cut taxes, including those that predate the stimulus, in a seven-page missive sent to Treasury Secretary Janet Yellen. Otherwise, they said, the relief law “would represent the greatest invasion of state sovereignty by Congress in the history of our Republic” — and they threatened to take “appropriate additional action” in response. Some state officials are already discussing a possible lawsuit.