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Appeals court allows AZ lawsuit on COVID fund use to move forward

By Greg Hahne
Associated Press
Published: Friday, May 20, 2022 - 11:40am

The 9th U.S. Circuit Court of Appeals has ruled that Arizona has a legal right to challenge part of the federal COVID-19 relief package that forbids using part of the money to offset tax cuts. 

The court has rejected claims from the Treasury Department that Congress has absolute powers on the conditions of how states use federal funds. 

While the judges did not rule on the merits of the case, the panel sent it back to the U.S. District Court judge who initially tossed it. 

Arizona lawyers argued the provisions of the package were ambiguous and infringed on state sovereignty by blocking them from making tax decisions. 

Though attorneys for the Treasury Department argue there was not a blanket ban on reducing taxes. Instead the provision specifically restricts the use of recovery funds to offset the revenue losses from those tax cuts.