Arizona Attorney General Mark Brnovich sued the U.S. Treasury Department, last Friday, over a provision in President Joe Biden’s massive coronavirus relief law that bars states from using the cash they get to directly or indirectly cut taxes. The Republican Attorney General contends the provision is unconstitutional because it is ambiguous and imposes on sovereignty by attempting to control state budget decisions, saying, “It’s unacceptable for the federal government to commandeer states’ tax policies and micromanage their budgets.” The lawsuit came despite Treasury Secretary Janet Yellen telling Brnovich in a Tuesday letter that nothing in the law prevents Arizona from cutting taxes, but the bar is using the $4.8 billion Arizona is getting from the American Rescue Plan Act to backfill the revenue cuts with the federal money. Governor Doug Ducey told reporters earlier in the week that his plan to enact a massive tax cut this year will not be affected by restrictions in Biden’s $1.9 trillion virus funding law.
KTAR News reports Brnovich stated, “Arizona needs clarity on the legality and meaning of this provision. Policymakers in the state have real and present interest in tax policy which could potentially decrease net tax revenues against some baselines. Those policymakers need to know how their decisions could interact with their use of funds under the Act.” Brnovich also expects that the lawsuit will make it to the Supreme Court. Ohio’s attorney general filed a similar lawsuit last week.
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