States want to use federal stimulus payments to fund tax cuts

Some U.S. states want to use the economic aid delivered under the federal government's recently passed coronavirus package in order to cut taxes. The problem: The $1.9 trillion  American Rescue Plan Act, which provides states with hundreds of billions in assistance, bars using the emergency funding for tax relief.

More than a dozen states are considering new tax credits or cuts that could be jeopardized because of the relief funds. Some of these cuts have been planned for a while, and others are just starting to be pursued. West Virginia, for instance, has been looking to cut its state personal income tax following the successful rollout of the vaccine in that state and an improving economy. "Congress may not micromanage a state's fiscal policies in violation of anti-commandeering principles nor coerce a state into forfeiting one of its core constitutional functions in exchange for a large check from the federal government," Republican West Virginia Attorney General Patrick Morrisey said in a statement.