A provision of the American Rescue Plan Act (ARPA) that forbade state governments from using pandemic funds for tax cuts has been struck down by a federal judge, who said it was unconstitutional,  Accounting Today reported. The measure was inserted at the last minute due to concerns of congressional Democrats, including the more-conservative Sen. Joe Manchin (D-W.Va.), that certain governments would not use the aid money as intended. This was especially a concern, given that, despite previous fears, state government revenues have been relatively flat, or down only slightly, compared to other years. But Republicans have bristled at the provision, saying that states should be able to decide what to do with their money, no questions asked, even if it's to fund tax cuts rather than services—for example, the salaries of teachers and firefighters. Beyond this, they argue that the provision makes the task of budgeting more complicated for states.

Alabama District Judge L. Scott Coogler ultimately agreed with this viewpoint, saying that the ARPA provision raises concerns about federalism and the degree to which the federal government can compel state governments on economic matters. By banning states from using aid money for tax cuts, the judge said, the federal government effectively forced state governments into adopting fiscal policies more favorable to the Biden administration. 

Accounting Today noted that this is but one of several cases around the country challenging the provision. In two of the four, district courts in Missouri and Arizona dismissed the complaints, finding that those states lacked standing. Both cases have been appealed. In Ohio and Kentucky, though, courts found that the  plaintiffs did have standing to sue. Cases in Mississippi, Texas and Louisiana are still pending.