A federal district court in Ohio has issued a permanent injunction against a provision in the American Rescue Plan Act (ARPA) prohibiting states from using ARPA funds to offset state tax cuts. The provision provided that no states, territories or local communities that accepted funds from the American Rescue Plan Act (approximately $350 billion total was appropriated) could use those funds to grant tax relief to its citizens. Rather, the Biden administration wanted to restrict the use of those funds to what it identified as pandemic relief. In issuing the injunction, U.S. District Court Judge Douglas Cole found that the provision authorized by Congress was “coercive and ambiguous” thereby violating the spending clause of the United States Constitution as well as states’ rights under the 10th Amendment by commandeering state taxing authority. Defending the prohibition, the U.S. Treasury Department argued that its regulations clarified any ambiguity and thereby mooted the claims by Ohio but the court did not agree. The court had previously denied a motion by Treasury to dismiss the challenge, but also rejected the Ohio request for a preliminary injunction. Notwithstanding, the decision was narrowly written and only enjoins the Treasury Department from enforcing the provision against the state of Ohio. There are also several similar cases pending in other federal courts, so we can anticipate that the decision may be appealed and more decisions to come on the issue.