States Appear Undeterred in Suing on Relief Spending Limits (1)

States eager to use federal coronavirus relief money won some leeway from the Treasury Department in how they may deploy it without violating a prohibition on cutting taxes with it. But the guidance isn’t enough to end Republican state lawsuits against the ban.

Interim final rules released by the Treasury Department on Monday permit states to issue tax relief under their own tax authorities as long as the relief amounts to no more than 1% of a state’s 2019 reporting year’s total revenue. It also allows them to adjust for inflation. But for larger tax changes states must ...