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Ohio files suit over COVID relief package

State asks a federal judge to block what it dubs a 'Tax Mandate'

Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., celebrate signing the American Rescue Plan Act at a ceremony on the West Front of the Capitol after the House passed the $1.9 trillion COVID-19 relief package March 10.
Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., celebrate signing the American Rescue Plan Act at a ceremony on the West Front of the Capitol after the House passed the $1.9 trillion COVID-19 relief package March 10. (Tom Williams/CQ Roll Call)

Ohio filed a lawsuit Wednesday that questions congressional power to put certain conditions on federal assistance money in the $1.9 trillion COVID-19 relief that President Joe Biden signed into law last week.

The state argues the law means it can claim about $5.5 billion, but only if officials agree that they won’t use that money to “directly or indirectly” offset revenue loss from tax reductions. That amount is about 7 percent of the state’s $74.6 billion in spending in 2020.

Ohio asks a federal judge to block what it dubs a “Tax Mandate” as a coercive offer that violates the Constitution and seeks to pressure states to enact Congress’s preferred tax policies.

“The Tax Mandate thus gives the States a choice: they can have either the badly needed federal funds or their sovereign authority to set state tax policy,” the lawsuit states. “But they cannot have both. In our current economic crisis, that is no choice at all. It is a metaphorical ‘gun to the head.’”

That language refers to Chief Justice John G. Roberts’ words, writing for the Supreme Court in a 2012 opinion that concluded the Medicaid expansion provisions in the 2010 health care law were unconstitutionally coercive since Congress threatened to completely withdraw Medicaid funding from states.

Ohio says tax revenue for fiscal 2020 fell $1.1 billion below estimates because of the pandemic, while demand for state assistance soared because of unemployment and economic struggles.

The law provides $195.3 billion to states and the District of Columbia to adopt programs that spur growth and renewal in local economies, but the mandate “effectively bans state tax cuts or credits” because “every change in tax policy that leads to a decrease in tax revenue” would violate that provision, the lawsuit states.

No state in the current economic situation can turn down the funds, Ohio argued in its lawsuit.

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