Twenty-one Republican state attorneys general are planning to file suit against the Biden Administration over a provision in the American Rescue Plan that prevents the use of federal aid provided to cities and states to fund tax cuts, the Washington Post reports.
The stimulus package sets aside $350 billion to help state and local governments who have been hit with a loss of tax revenue because of the business downturn that resulted from the pandemic and the lack of economic preparation from the federal government.
A provision in the ARP Act bans municipalities and states that accept federal aid from shifting that money from back-to-work efforts to tax cuts. The GOP attorneys general claim that the provision is an “unprecedented and unconstitutional” limit on states’ abilities to regulate their own taxes.
Of course, the states and localities could decide not to accept the federal grants if they choose to lower taxes, but the GOP attorneys general seem to want to have their cake and eat it, too. They want to use federal money from other states designed to help their citizens get back to work, clean schools or provide health care and shift the money into the pockets of donors.
Some states already passed tax cuts and some localities have reduced property taxes which were to become active prior to the passing of the ARP Act, and confusion about the meaning, intent and execution of the ARP Act may disrupt those measures–or may be clarified by future legislation.
However, given the partisan nature of Washington and the fact that the legislation passed along strictly partisan lines even though it was overwhelmingly popular among the population, a resolution through legislation seems unlikely.