Bloomberg Tax
July 1, 2021, 11:26 PM

Ohio Wins First State Challenge to Pandemic Aid Spending Limits

Sam McQuillan
Sam McQuillan

Ohio is the first state to win a court challenge against a congressional ban that prevents states from using American Rescue Plan funds to pay for tax cuts.

The U.S. District Court for the Southern District of Ohio, in an opinion Thursday, granted Ohio an injunction to prevent Treasury Secretary Janet Yellen from enforcing the government’s ban against the state. District Judge Douglas Cole said the U.S. Treasury—which has been tasked with enforcing the provision—doesn’t present a clear difference between a direct and indirect use of federal funding to offset taxes.

By providing no discernible meaning that can ...