Sens. Mike Crapo (R-ID) and Jim Risch (R-ID) recently introduced legislation designed to eliminate an American Rescue Plan provision preventing states from using relief funds to cut taxes, providing greater policy autonomy.
The State Fiscal Flexibility Act would eliminate a provision stipulating any state wishing to provide tax relief while using relief funds may do so, but only at a punishable cost.
“If a state like Idaho wants to provide tax relief in the interest of economic recovery, and to help people return to earning their livelihoods, the American Rescue Plan says it will be financially punished by the federal government,” Crapo. “This infringes on states’ authority to design their own fiscal policies and invites partisan politics into federal and state relations.”
The American Rescue Plan includes a $350 billion bailout for states. Funds can be applied to virtually anything a state chooses.
“Last year, Gov. Little and the Idaho State Legislature cut red tape and limited government spending to put the state in the strongest possible position to emerge from this pandemic,” Risch said. “Yet under Democrats’ COVID spending plan, poorly managed states receive a windfall while fiscally responsible states like Idaho are barred from providing tax relief to its citizens. With this legislation, financial competence will be rightly rewarded — not penalized.”