|WASHINGTON, D.C. — Today, House Republican leaders sent a letter to Secretary of the Treasury Janet Yellen highlighting the urgent need for guidance and requesting clarification from the Treasury Department on questions pertaining to the Coronavirus State Fiscal Relief and Coronavirus Local Fiscal Relief Funds included in the American Rescue Plan (ARP). The letter was led by top Republican on the House Ways and Means Committee Kevin Brady (R-TX), Republican Whip and top Republican of the Select Subcommittee on the Coronavirus Crisis Steve Scalise (R-LA), and top Republican on the Committee on Oversight and Reform James Comer (R-KY), and signed by all Republican members of their committees.
Ambiguous provisions included in the ARP could restrict states receiving State and Local Fiscal Recovery funds from implementing new tax cuts. The federal government should not dictate state and local fiscal decisions, including stimulus checks to families, state-level earned income or child tax credits, state unemployment insurance trust funds, or sales tax holidays.
“We have heard from many stakeholders concerned about the apparent breadth of this provision, which was included in the ARP without the benefit of committee hearings, a legislative markup, or any input from affected stakeholders.” said the Republican leaders.
Yesterday, The Washington Post reported that Republican attorneys general from 21 states also called on the Biden administration in a letter to Treasury Secretary Janet Yellen expressing similar concern that the relief “would represent the greatest invasion of state sovereignty by Congress in the history of our Republic.”
March 17, 2021
The Honorable Janet Yellen
Dear Secretary Yellen:
We are writing with serious concerns about Public Law No. 117-2 (the “American Rescue Plan Act of 2021” or ARP), and specifically the Coronavirus State Fiscal Relief and Coronavirus Local Fiscal Relief Funds. We are especially concerned about a provision inserted into the Coronavirus State Fiscal Relief Fund before it was signed by President Biden. Specifically, the provision appears to impose coercive restrictions on states, prohibiting them from “directly or indirectly” taking actions that would “reduce net revenue” if the states receive even a dime of federal State Fiscal Recovery Funds. Furthermore, this prohibition may apply for a period that extends through December 31, 2024. We have heard from many stakeholders concerned about the apparent breadth of this provision, which was included in ARP without the benefit of committee hearings, a legislative markup, or any input from affected stakeholders.
We are also generally concerned about the ambiguity in the Coronavirus State Fiscal Relief and Coronavirus Local Fiscal Relief Funds.
For these reasons, we believe clarification from the Treasury Department is urgently needed on the following questions:
We respectfully request that you please respond in writing no later than March 26, 2021.
Because many state legislatures are now in session and have relatively short periods in which to make important fiscal decisions, we also request that Treasury promptly issue guidance on the Coronavirus State and Local Fiscal Relief Funds.
Thank you for your attention to this request.
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