Tom Wickham Tom Wickham
Senior Vice President, State and Local Policy

Published

June 16, 2021

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With the passage of the American Rescue Plan Act (ARPA) earlier this year, $350 billion in financial aid was extended to all 50 states at the statewide, county, and metropolitan level. This aid was offered with the intention that it would be used flexibly to enable states and localities to use those funds to best help their economies to recover from the economic downturn brought on by the Covid-19 pandemic. However, this aid was offered with a catch. A provision of the American Rescue Plan stipulates that these funds may not be used by states “directly or indirectly” to offset revenue reductions. (section 9901, P.L. 117-2)​.

This provision is written so broadly that it effectively prohibits states from managing their own tax codes. Moreover, the provision has a recoupment clause that allows Treasury to take back these funds should any state be deemed to violate this provision. To track this dynamic, the State and Local Policy Initiative has produced an interactive map:

ARPA Funds Tied Up by ARPA Tax Mandate and Litigation Efforts to Oppose


No Lawsuits
1 Lawsuit
2 Lawsuits

Alabama

  • $4.04 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

Alaska

  • $1.36 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

Arizona

  • $7.63 Billion
    Total ARPA Funds Allocated

Lawsuits

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

The State of Arizona v. Janet Yellen in the United States District Court for the District of Arizona.

Arkansas

  • $2.81 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

California

  • $42.63 Billion
    Total ARPA Funds Allocated

Colorado

  • $6.07 Billion
    Total ARPA Funds Allocated

Connecticut

  • $4.35 Billion
    Total ARPA Funds Allocated

Delaware

  • $1.36 Billion
    Total ARPA Funds Allocated

Florida

  • $17.62 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

Georgia

  • $8.40 Billion
    Total ARPA Funds Allocated

Hawaii

  • $2.27 Billion
    Total ARPA Funds Allocated

Idaho

  • $1.89 Billion
    Total ARPA Funds Allocated

Illinois

  • $13.71 Billion
    Total ARPA Funds Allocated

Indiana

  • $5.86 Billion
    Total ARPA Funds Allocated

Lawsuits

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Iowa

  • $2.69 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

Kansas

  • $2.72 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Kentucky

  • $4.24 Billion
    Total ARPA Funds Allocated

Lawsuits

The Commonwealth of Kentucky and the State of Tennessee v. Janet Yellen, et al, in United States District Court for the Eastern Division of Kentucky.

Louisiana

  • $5.19 Billion
    Total ARPA Funds Allocated

Lawsuits

The State of Texas v. Janet Yellen, in U.S. District Court for the Northern District of Texas

Maine

  • $1.65 Billion
    Total ARPA Funds Allocated

Maryland

  • $6.36 Billion
    Total ARPA Funds Allocated

Massachusetts

  • $8.10 Billion
    Total ARPA Funds Allocated

Michigan

  • $10.31 Billion
    Total ARPA Funds Allocated

Minnesota

  • $4.88 Billion
    Total ARPA Funds Allocated

Mississippi

  • $2.90 Billion
    Total ARPA Funds Allocated

Lawsuits

The State of Texas v. Janet Yellen, in U.S. District Court for the Northern District of Texas

Missouri

  • $5.48 Billion
    Total ARPA Funds Allocated

Lawsuits

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Montana

  • $1.37 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Nebraska

  • $1.77 Billion
    Total ARPA Funds Allocated

Lawsuits

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Nevada

  • $4.12 Billion
    Total ARPA Funds Allocated

New Hampshire

  • $1.54 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

New Jersey

  • $10.19 Billion
    Total ARPA Funds Allocated

New Mexico

  • $2.46 Billion
    Total ARPA Funds Allocated

New York

  • $23.80 Billion
    Total ARPA Funds Allocated

North Carolina

  • $8.94 Billion
    Total ARPA Funds Allocated

North Dakota

  • $1.36 Billion
    Total ARPA Funds Allocated

Ohio

  • $11.24 Billion
    Total ARPA Funds Allocated

Lawsuits

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

The State of Ohio, v. Janet Yellen, in the United States District Court for the Southern District of Ohio.

Oklahoma

  • $3.65 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Oregon

  • $4.26 Billion
    Total ARPA Funds Allocated

Pennsylvania

  • $13.72 Billion
    Total ARPA Funds Allocated

Rhode Island

  • $1.78 Billion
    Total ARPA Funds Allocated

South Carolina

  • $3.87 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

South Dakota

  • $1.37 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

Tennessee

  • $6.31 Billion
    Total ARPA Funds Allocated

Lawsuits

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

The Commonwealth of Kentucky and the State of Tennessee v. Janet Yellen, et al, in United States District Court for the Eastern Division of Kentucky.

Texas

  • $27.62 Billion
    Total ARPA Funds Allocated

Lawsuits

The State of Texas v. Janet Yellen, in U.S. District Court for the Northern District of Texas

Utah

  • $2.74 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

State of Missouri v. Janet Yellen, in U.S. District Court for the Eastern District of Missouri.

Vermont

  • $1.36 Billion
    Total ARPA Funds Allocated

Virginia

  • $6.88 Billion
    Total ARPA Funds Allocated

Washington

  • $7.10 Billion
    Total ARPA Funds Allocated

West Virginia

  • $2.06 Billion
    Total ARPA Funds Allocated

Lawsuits

State of West Virginia, v. U.S. Department of the Treasury in U.S. District Court for the Northern District of Alabama.

Wisconsin

  • $5.71 Billion
    Total ARPA Funds Allocated

Wyoming

  • $1.36 Billion
    Total ARPA Funds Allocated

In response, 23 states have filed and signed on to 6 lawsuits against Treasury Secretary Yellin as an unconstitutional intrusion on states’ authority and autonomy. ​The U.S. Chamber of Commerce, in conjunction with the National Federation of Independent Businesses (NFIB), have filed amicus briefs in support of these suits in Alabama, Missouri, Ohio, and Arizona.

Recently, Treasury adopted an interim final rule on the use of the funds which sets out a complex set of guidelines as to whether or not a state is in violation. An excerpt of the guidance describing this is below:

“If a recipient government (i) reports covered changes that reduce tax revenue (Step 1); (ii) to a degree greater than the de minimis (Step 2); (iii) has experienced a reduction in net tax revenue (Step 3); and (iv) lacks sufficient revenue from other, permissible sources to pay for the entirety of the reduction (Step 4), then the recipient government will be considered to have used Fiscal Recovery Funds to offset a reduction in net tax revenue, up to the amount that revenue has actually declined.” (page 94)

The states are put in an unfair position where they are already deep in their budget planning and cannot get their legislation pre-cleared by Treasury, but can only dispute a purported violation under a complex set of guidelines.

To allow states to leverage these much-needed funds to the maximum benefit of their citizens, it is imperative that this cumbersome bureaucratic overreach be rolled back. With these restraints removed the funds can be used freely by state governments.

ARPA Portal

The U.S. Treasury has opened a portal by which state and local governments can request funding from the $350 billion state and local allocation of American Rescue Plan Act (ARPA) funds. 50% of the funds provided to the states will be provided in a first tranche beginning in May 2021 and the other 50% will be provided 12 months later. Funds can be used to cover costs incurred until December 31, 2024.

As these funds become available to states, they would best be leveraged in programs that invigorate the economy, incentivize workers to rejoin the workforce, provide workforce training, and make much-needed investments in infrastructure.

About the authors

Tom Wickham

Tom Wickham

Tom Wickham, former Parliamentarian of the U.S. House of Representatives, serves as senior vice president of State & Local Policy at the U.S. Chamber of Commerce. Wickham leads the Chamber’s new division that monitors state and local policy developments and coordinates state and local policy advocacy strategies within the existing Chamber framework.

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