(Reuters) – The U.S. Treasury said on Tuesday it is drafting further guidance on a provision in President Joe Biden’s $1.9 trillion coronavirus aid plan that prohibits states from using stimulus money to replace revenue lost to tax cuts.
The provision has drawn criticism from some 21 Republican state attorneys general, with Ohio’s top lawyer suing the Biden administration last week, arguing broad language in the American Rescue Plan Act violates the state’s constitutional right to determine its own tax policies.
Treasury Secretary Janet Yellen said in a written response to these concerns “it is well established that Congress may place such reasonable conditions on how states may use federal funding.”
(Reporting by David Lawder; Editing by Chris Reese)
