“It’s important that there are guardrails to prevent these funds from being used to cut taxes for those at the top,” he added.
But some Republican-led states are pointing to the apparent prohibition as a violation of their sovereignty and calling for that part of the law to be repealed. They see the requirement that states refrain from cutting taxes as an unusual intervention by the federal government in state tax policy.
“It is an intrusion into what would traditionally be a state prerogative of how we balance our budget,” said Ben Watkins, the director of the Florida Division of Bond Finance. “If they want to give us this money to deal with Covid, then they should just give it to us with no strings attached.”
Funding for state and local governments was one of the most contentious issues during stimulus talks, with Republicans saying Democrat-led states were being rewarded for mismanaging their finances and labeling the aid as a “blue-state bailout.”
Those concerns were amplified in the latest legislation, which allocates money to a state based on a formula that considers its unemployment rate rather than its population. Conservative-leaning states, many of which had less onerous coronavirus restrictions and did not shut down as much business activity, claim they are essentially being penalized for prioritizing their economies during the pandemic.
But early analyses of the bill show that both conservative-leaning and liberal-leaning states will receive big chunks of cash. California, Florida, New York and Texas will each get more than $10 billion in aid, according to a Tax Foundation tally.
Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.
Article source: https://www.nytimes.com/2021/03/12/us/politics/biden-stimulus-state-tax-cuts.html
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