Ohio sues Biden administration over tax mandate in coronavirus aid

(Reuters) - Ohio’s top lawyer on Wednesday sued the Biden administration over its $1.9 trillion coronavirus relief package, saying a last-minute change in the legislation unlawfully blocks state lawmakers from managing their budgets as they see fit.

FILE PHOTO: House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer display the "American Rescue Plan" during the enrolment ceremony following passage of U.S. President Joe Biden's $1.9 trillion coronavirus disease (COVID-19) relief bill on Capitol Hill in Washington, U.S., March 10, 2021. REUTERS/Erin Scott

Ohio Attorney General Dave Yost, a Republican, asked a federal judge in the state to halt implementation of a part of the relief bill, known as the “tax mandate,” that prohibits coronavirus relief money from being used to subsidize tax cuts.

“Slipping last-minute conditions into a plan meant to help people that instead handcuffs Ohio is why people don’t trust government,” Yost said in a news release. “And it almost always leads to constitutional mischief.”

Yost filed the lawsuit against the U.S. Treasury Department, which did not immediately respond to a request for comment.

Democrats added new language into the legislation after several senators from the party’s moderate wing said they worried Republican-led states would use the relief money to subsidize tax cuts, rather than funding public services.

The tax mandate prohibits states that take money under the relief bill from using that funding to “directly or indirectly” offset revenue loss.

Yost’s lawsuit alleges that “Congress lacks constitutional authority to limit the States’ taxing power in this manner.”

Separately, 21 Republican state attorneys general on Tuesday sent a letter threatening to sue the Biden administration over the tax mandate, saying it imposed “unprecedented and unconstitutional” limits on their states’ ability to lower taxes.

Biden signed the popular relief program into law on March 11, promising that it would aid the recovery from a recession caused by the coronavirus pandemic.

The bill provides $400 billion for direct payments of $1,400 to most Americans, aid of $350 billion to state and local governments, an expansion of the child tax credit and more funds to distribute vaccines.

Reporting by Jan Wolfe; Editing by Noeleen Walder and Bill Berkrot