Rutledge sues U.S. over relief funds

Second Amendment

Arkansas Attorney General Leslie Rutledge helped lead a lawsuit against the Biden administration and threw her support behind the National Rifle Association in a pair of Wednesday legal filings.

Thirteen states, including Arkansas, sued President Joe Biden’s administration Wednesday, claiming the $350 billion in pandemic relief funds for states and local governments “sets up an untenable choice” potentially blocking states like Arkansas from cutting taxes.

While Rutledge claimed that Arkansas could lose relief money if the Legislature cuts taxes, federal officials said that would happen only if states use federal relief money to “offset” any tax cuts in their budgets.

“President Biden’s latest COVID spending bill blocks our state from reducing Arkansans’ tax burden,” Rutledge said in a statement. “Biden, [Vice President Kamala] Harris and [House Speaker Nancy] Pelosi don’t have the right to control Arkansas’s tax laws and the Constitution does not allow such blatant federal overreach.”

On March 11, Biden signed the American Rescue Plan Act of 2021, which provided $1.9 trillion in pandemic-related economic relief. Arkansas is to receive $2.8 billion from the federal government as part of the relief package, with $1.65 billion going directly to the state and $1.156 billion going to local governments in Arkansas, according to the lawsuit.

The states argue that the money in the package is critical given how state and local governments had to increase spending, while other states’ economies were severely hurt and lost tax revenue during the pandemic.

In Arkansas’ case, the state “was likewise forced to make significant investments in educational technology to facilitate remote learning in its K-12 schools,” according to the lawsuit.

With some Arkansas legislators proposing various ways to slash taxes, Rutledge said if a federal judge doesn’t step in, that $2.8 billion in relief funding could be in jeopardy.

Responding to that concern, U.S. Treasury Secretary Janet Yellen said there is nothing in the relief package that prevents states from passing “a broad variety of tax cuts,” but if states want to use the federal relief funds, they can’t use them to fund tax cuts, Yellen said.

“It simply provides that funding received under the Act may not be used to offset a reduction in net tax revenue resulting from certain changes in state law,” Yellen wrote in a March 23 letter. “If States lower certain taxes but do not use funds under the Act to offset those cuts — for example, by replacing the lost revenue through other means — the limitation in the Act is not implicated.”

But the letter from Yellen did not assuage Rutledge and the 12 other attorneys general, who maintain concerns over the language in the relief package.

The lawsuit against the federal government is not the only legal action Rutledge took Wednesday.

With the National Rifle Association locked in a court battle over its attempted move to Texas, Rutledge said she thinks she can help, filing a statement in support of the gun-rights group.

The amicus brief, signed by 15 other attorneys general, supports the beleaguered gun-rights group in its bankruptcy case in Texas.

After a lawsuit from the New York attorney general accusing NRA leaders of fraud and financial misconduct, the NRA filed for bankruptcy in January and is now attempting to change its incorporation from New York to Texas.

New York is attempting to block the NRA’s attempted legal move to Texas in a bid to keep the organization in New York.

Rutledge in her amicus brief said New York’s lawsuit was a “politically motivated assault on free speech” and that the NRA should be able to reincorporate in Texas without interference.

“New York’s effort to stop the NRA from reorganizing in Texas is just another chapter in New York’s vendetta against the Second Amendment,” Rutledge said in a statement. “I am proud to continue to support the right to keep and bear arms and organizations like the NRA who stand up to defend it.”

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