Teleforum

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (the Act). Purportedly intended to help the U.S. economy recover from the COVID virus and the steps taken to prevent its spread, it calls for the Federal Treasury to provide approximately $350 billion in aid to state governments. The Act imposes on states that accept the aid a four-year prohibition against lowering taxes. By April 2, sixteen states – including Ohio, Kentucky, Tennessee, Arizona - filed suit to challenge the prohibition, claiming that the Constitution does not permit Congress to dictate how states handle their budgets. The U.S. District Court for the Southern District of Ohio permanently enjoined application of the Act’s tax-cut prohibition to Ohio, concluding that it exceeded Congress’ authority. Other courts have dismissed the suits as premature or dismissed them for lack of standing.The authority of Congress to dictate terms to the states is a perennial issue. It has been addressed before