Judge Forbids Treasury From Recouping Covid Relief From States

A federal judge permanently blocked the U.S. Treasury Department from trying to recover any pandemic relief funds from Texas, Louisiana or Mississippi if those states use the aid to offset state tax revenue shortfalls.

The states challenged a provision in the Biden administration’s American Rescue Plan Act they claimed bars using the funds to fill budget gaps -- if the Treasury Department believes state lawmakers intentionally lowered certain state taxes during the pandemic.

U.S. District Judge Matthew Kacsmaryk, a Donald Trump appointee in Amarillo, Texas, said these strings created a “gun to the head” choice for states that couldn’t ...