Tesla faced numerous questions about its Autopilot technology after a Florida driver was killed in 2016 when the system of sensors and cameras failed to see and brake for a tractor-trailer crossing a road.
Now the company is facing more scrutiny than it has in the last five years for Autopilot, which Tesla and its chief executive, Elon Musk, have long maintained makes its cars safer than other vehicles. Federal officials are looking into a series of recent accidents involving Teslas that either were using Autopilot or might have been using it.
The National Highway Traffic Safety Administration confirmed last week that it was investigating 23 such crashes. In one accident this month, a Tesla Model Y rear-ended a police car that had stopped on a highway near Lansing, Mich. The driver, who was not seriously injured, had been using Autopilot, the police said.
In February in Detroit, under circumstances similar to the 2016 Florida accident, a Tesla drove beneath a tractor-trailer that was crossing the road, tearing the roof off the car. The driver and a passenger were seriously injured. Officials have not said whether the driver had turned on Autopilot.
crash near Houston in which a Tesla ran into a stopped police vehicle on a highway. It is not clear if the driver was using Autopilot. The car did not appear to slow before the impact, the police said.
Autopilot is a computerized system that uses radar and cameras to detect lane markings, other vehicles and objects in the road. It can steer, brake and accelerate automatically with little input from the driver. Tesla has said it should be used only on divided highways, but videos on social media show drivers using Autopilot on various kinds of roads.
“We need to see the results of the investigations first, but these incidents are the latest examples that show these advanced cruise-control features Tesla has are not very good at detecting and then stopping for a vehicle that is stopped in a highway circumstance,” said Jason Levine, executive director of the Center for Auto Safety, a group created in the 1970s by Consumers Union and Ralph Nader.
This renewed scrutiny arrives at a critical time for Tesla. After reaching a record high this year, its share price has fallen about 20 percent amid signs that the company’s electric cars are losing market share to traditional automakers. Ford Motor’s Mustang Mach E and the Volkswagen ID.4 recently arrived in showrooms and are considered serious challengers to the Model Y.
The outcome of the current investigations is important not only for Tesla but for other technology and auto companies that are working on autonomous cars. While Mr. Musk has frequently suggested the widespread use of these vehicles is near, Ford, General Motors and Waymo, a division of Google’s parent, Alphabet, have said that moment could be years or even decades away.
played a major role” in the 2016 Florida accident. It also said the technology lacked safeguards to prevent drivers from taking their hands off the steering wheel or looking away from the road. The safety board reached similar conclusions when it investigated a 2018 accident in California.
By comparison, a similar G.M. system, Super Cruise, monitors a driver’s eyes and switches off if the person looks away from the road for more than a few seconds. That system can be used only on major highways.
In a Feb. 1 letter, the chairman of the National Transportation Safety Board, Robert Sumwalt, criticized NHTSA for not doing more to evaluate Autopilot and require Tesla to add safeguards that prevent drivers from misusing the system.
The new administration in Washington could take a firmer line on safety. The Trump administration did not seek to impose many regulations on autonomous vehicles and sought to ease other rules the auto industry did not like, including fuel-economy standards. By contrast, President Biden has appointed an acting NHTSA administrator, Steven Cliff, who worked at the California Air Resources Board, which frequently clashed with the Trump administration on regulations.
Concerns about Autopilot could dissuade some car buyers from paying Tesla for a more advanced version, Full Self-Driving, which the company sells for $10,000. Many customers have paid for it in the expectation of being able to use it in the future; Tesla made the option operational on about 2,000 cars in a “beta” or test version starting late last year, and Mr. Musk recently said the company would soon make it available to more cars. Full Self Driving is supposed to be able to operate Tesla cars in cities and on local roads where driving conditions are made more complex by oncoming traffic, intersections, traffic lights, pedestrians and cyclists.
Despite their names, Autopilot and Full Self-Driving have big limitations. Their software and sensors cannot control cars in many situations, which is why drivers have to keep their eyes on the road and hands on or close to the wheel.
a November letter to California’s Department of Motor Vehicles that recently became public, a Tesla lawyer acknowledged that Full Self-Driving struggled to react to a wide range of driving situations and should not be considered a fully autonomous driving system.
The system is not “not capable of recognizing or responding” to certain “circumstances and events,” Eric C. Williams, Tesla’s associate general counsel, wrote. “These include static objects and road debris, emergency vehicles, construction zones, large uncontrolled intersections with multiple incoming ways, occlusions, adverse weather, complicated or adversarial vehicles in the driving paths, unmapped roads.”
Mr. Levine of the Center for Auto Safety has complained to federal regulators that the names Autopilot and Full Self-Driving are misleading at best and could be encouraging some drivers to be reckless.
“Autopilot suggests the car can drive itself and, more importantly, stop itself,” he said. “And they doubled down with Full Self-Driving, and again that leads consumers to believe the vehicle is capable of doing things it is not capable of doing.”
A year ago the pandemic drained the New York City subway of nearly all its riders, sickened thousands of transit workers and plunged North America’s largest public transit agency into its worst financial emergency ever.
Today ridership on the subway has crept back up to about one third of its usual levels, from an all-time low of 7 percent last spring. An infusion of billions of dollars in federal aid has kept the Metropolitan Transportation Authority afloat. And the agency, which operates the subway, buses and two commuter rail lines, was further lifted by another $6 billion in President Biden’s rescue plan.
But the M.T.A.’s long-term survival depends on the return of its largest funding source: riders. Fares provide early 40 percent of the agency’s operating revenue, a higher percentage than almost any other major American transit system.
Now, as more people are vaccinated and urban life slowly rebounds, public transit officials are confronting a sobering reality: a growing consensus that ridership may never return entirely to its prepandemic levels.
Though public health experts generally agree that riding trains and buses is not a major risk factor for exposure to the virus, transit experts say some commuters with the means to do so are still likely to stay with the alternatives — like using cars or bikes — that they turned to during the pandemic.
Canadian Pacific and Kansas City Southern announced plans on Sunday to combine in a $29 billion deal that would create the first railroad network connecting the United States, Mexico and Canada.
It is an effort to capitalize on the trade flows expected to run through the three countries after President Donald J. Trump signed the United States-Mexico-Canada Agreement into law last year. It’s also a bet on the strength of the industrial economy as the United States rebounds from the pandemic.
Canadian Pacific links major ports on the East and West Coasts between the United States and Canada, while Kansas City Southern connects the United States, Mexico and Panama. The two connect on a single point: a joint facility in Kansas City, Mo., where Kansas City Southern is based.
“This deal just has so many longer-term strategic advantages,” Kansas City Southern’s chief executive, Patrick J. Ottensmeyer, said in an interview. “Our board really saw the value in putting these two companies together right now.”
$208 a share offer from the Blackstone Group, a private equity firm, that Kansas City Southern rebuffed last year. Shares of Kansas City are up 12 percent year-to-date, while shares of Canadian Pacific have climbed almost 10 percent.
The boards of both companies have unanimously approved the cash-and-stock deal, which is expected to close by the middle of 2022, subject to customary approvals.
The railroad industry can be viewed as a bellwether of industrial activity; it expects to benefit from a growing U.S. economy as it emerges from the pandemic. The Federal Reserve has signaled optimism for the nation’s economic outlook, and President Biden signed a $1.9 trillion spending bill into law this month.
in his annual letter.
The railroad executives on Sunday highlighted other opportunities they see in the deal. Mr. Creel called the merger a “compelling opportunity to take trucks off the road” at a time when the United States is focused on a transition to a greener economy. It also reduces risks in the global supply chain after a pandemic that highlighted its weaknesses, Mr. Ottensmeyer said.
The deal needs approval from the Surface Transportation Board, a division of the Department of Transportation, which has previously acknowledged concerns that railroad consolidation has led to service issues for shippers. Canadian Pacific’s past efforts to acquire U.S. railroads have failed, in part because of such concerns. That includes talks with CSX Corporation in 2014 and Norfolk Southern in 2016. And the Biden administration has already signaled a tougher stance on antitrust scrutiny.
Because of its size, Kansas City Southern is exempt from guidelines put in place in 2001 to tighten deal scrutiny in the industry. The combined company would still be the smallest of the remaining six largest freight railroads operating in the United States. The two railroads have no overlap, Mr. Creel and Mr. Ottensmeyer said — and, in some cases, the transaction will create new markets.
“There’s zero other deals that represent the uniqueness of this deal,” Mr. Creel said.
In October, the Centers for Disease Control and Prevention lifted its “no sail” order on U.S. cruise ships and set out a framework that would allow them to start sailing again, bringing relief and hope to a decimated industry — and to many cruise fans.
And then, nothing.
Nearly six months later, cruise lines are still waiting for technical instructions from the agency, which will allow them to prepare their ships for simulation voyages, designed to test whether they can safely sail.
In other parts of the world, the industry is stirring to life. Some cruise lines plan to restart domestic cruises in Europe later this month and voyages around the British Isles are scheduled for June, when lockdown restrictions are expected to be lifted. Royal Caribbean is running cruises to Greece from the Israeli port of Haifa this spring that will require all the crew and passengers on board to be fully vaccinated.
The C.D.C. says its current focus is working with cruise lines to implement the initial phase requirements of testing all crew and setting up onboard labs as part of a step-by-step approach for the return of passenger cruising. The framework includes extensive testing, quarantine measures and social distancing, but the details remain unclear.
downsize their fleets and sell ships for scrap.
Now, with vaccinations underway across the world and infection rates dropping in some regions, cruise companies are scrambling to prepare their ships for a gradual return starting in Europe and Asia. In the United States, cruise fans will likely have to wait at least until the fall.
“We are hopeful for this year,” said Colleen McDaniel, editor in chief of the cruise news site Cruise Critic. “There have already been some success stories out of Europe where cruise lines have shown that they’ve got great protocols in place, that they are committed to adhering to them, that they can keep passengers in a bubble and that they can do effective testing. We can expect those learnings to help inform cruising in the United States.”
While the timetable remains fluid, here’s what we can expect from cruising over the next few months.
AIDA Cruises has scheduled an excursion around the Canary Islands from March 20 and will be followed by Costa Cruises, which plans to resume Italian sailings on March 27. MSC Cruises is also planning a European voyage in May that will only be open to passengers living in the European Union’s Schengen zone.
Last summer, some cruise companies resumed operations in Europe with strict health and safety protocols but shut them down again in the fall after some ships reported cases of Covid-19 and the region went back into lockdown in response to a resurgence of the virus.
In Britain, domestic cruises could begin from May 17, when lockdowns on the hospitality sector are expected to be eased, the ministry of transport said earlier this month.
Princess, P & O, Cunard and Hurtigruten are among the cruise lines that have announced “staycation sailings” around the British Isles this summer. Some ships will sail around the country’s coastline without calling at any ports, while others will offer shore excursions.
“People are very excited to start cruising again and we are seeing tons of demand right now, particularly in the expedition space,” said John Downey, the president of the Americas for Hurtigruten, a Norwegian line specializing in expedition cruises.
“We will continue to focus on amazing, remote destinations where our guests are more often surrounded by wildlife and nature rather than human populations,” he added. “With stringent health protocols we put in place, we feel very comfortable about the safety of our guests and crew.”
cruiseguy.com, referring to the missing technical details in the conditional sailing order.
“They are waiting for it now and they expect them to update their guidance because it was issued before the vaccines were rolled out and a lot has changed since then,” Mr. Chiron added.
Cruise executives say they expect the C.D.C. to issue the technical requirements soon.
Cruise Lines International Association, the industry group that represents most of the largest cruise companies, announced a mandatory set of health protocols that will be implemented as part of a phased-in resumption of operations.
The core elements include:
Testing: 100 percent of passengers and crew will be tested for Covid-19 before embarkation.
Mask-Wearing: All passengers and crew will have to wear masks onboard and during excursions whenever they can’t physically distance.
Distancing: Physical distancing in terminals, onboard ships, on private islands and during shore excursions will be required.
Ventilation: Air management and ventilation strategies to increase fresh air onboard must be in place and, where feasible, enhanced filters and other technologies to mitigate risk will be used.
Medical Capability: Each ship must have a plan to manage possible medical needs and must allocate cabins for isolation in case of an outbreak. Advance arrangements must be made with providers of onshore transportation and medical facilities.
Shore Excursion: Operators must set health and safety protocols and make sure passengers comply. Those who don’t will be prohibited from re-boarding.
“Ultimately, our decisions will be informed by our global medical and science experts and the requirements of the places we operate and visit,” said Roger Frizzell, a spokesman for Carnival Corporation. “Our highest responsibility and top priorities are compliance, environmental protection, and the health, safety and well-being of our guests, crew and the communities we visit.”
Will vaccinations be required?
Some companies are reluctant to depend on testing alone, after the SeaDream 1, a ship that had aspired to be a model for a safe return to cruising, cut short its Caribbean voyage last year because several passengers tested positive for the coronavirus, despite the fact they’d had a negative test before boarding.
Most major cruise lines have not decided whether they will require vaccinations for future sailings and are waiting for further scientific guidance once inoculation becomes more widespread around the globe.
In Britain, Saga Cruises and P & O said that they would require all guests to be fully vaccinated before boarding their ships throughout 2021. Royal Caribbean announced sailings from Israel to Greece in May, where all crew members and passengers over the age of 16 must be vaccinated.
Royal Caribbean Group. “We’ve been getting more and more experience with sailings abroad out of Germany, Singapore, the Canary Islands and Italy and we will continue to learn and adapt as new knowledge and scientific discoveries like the vaccine come to the fore.”
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The world’s thirst for gasoline may never return to pre-pandemic levels, the International Energy Agency said on Wednesday.
Greater fuel efficiency, the growing shift toward electric vehicles and changing transportation habits are expected to weigh on gasoline use in the years ahead, even as consumption recovers from last year’s 11 percent drop caused by lockdowns and other restrictions.
Fatih Birol, the agency’s executive director, has used his role to push for a shift to cleaner energy to help tackle climate change. He said at a news conference Wednesday that it would be “very unlucky” if gasoline use returned to 2019 levels.
The agency said that gasoline consumption was expected to increase strongly in emerging markets like China and India in the next few years, but that beginning in 2023 it would likely decline in the large industrialized economies.
Oil 2021 and published Wednesday, said that the pandemic had set off changes in consumer behavior and that governments were making stronger efforts to reduce carbon emissions.
Although gasoline consumption may have peaked, the report predicted that oil demand would probably increase in the coming five years, but growth would be much slower than forecast before the pandemic. In the agency’s view, oil consumption would reach 104.1 million barrels a day in 2026 compared with 99.7 million barrels a day in 2019.
China has approved its fifth Covid-19 vaccine, and it’s made from the ovary cells of hamsters.
The vaccine was developed by Anhui Zhifei Longcom Biopharmaceutical Co. and the Chinese Academy of Sciences. It was developed by a team led by George Gao, the head of the Chinese Center for Disease Control and Prevention.
The Chinese Academy of Sciences said in a statement on Tuesday that the Chinese government had given the shot authorization for emergency use on March 10. This is the fourth vaccine China has approved for emergency use after two vaccines made by Sinopharm, a state-owned vaccine maker, and one developed by Sinovac, a private Beijing company. It has also approved a fifth vaccine, made by the Chinese company CanSino Biologics in partnership with the military, for general use.
Neither the company nor the institute behind the latest vaccine to be approved has published efficacy data from its Phase 3 trials, which are taking place in China, Ecuador, Indonesia, Pakistan and Uzbekistan.
Uzbekistan has approved the vaccine. The Chinese Academy of Sciences said that Phase 3 clinical trials, which involve 29,000 volunteers, were “progressing smoothly.”
these cells, a person’s antibody levels may not be high enough to clear the infection, said Ooi Eng Eong, a professor of microbiology and immunology at the National University of Singapore. “You are more likely to get a breakthrough infection,” he said.
Ohio and Indiana are the latest states to announce significant expansions in Covid-19 vaccine eligibility for their residents. In Ohio, eligibility will be extended to anyone 40 years and older as of Friday, as well as for residents with certain medical conditions, including cancer, chronic kidney disease and heart disease. Indiana extended its group of eligible residents to people 45 and older, effective immediately. And Wisconsin on Tuesday said residents 16 years and older with certain medical conditions will be eligible for vaccinations a week earlier than initially planned.
President Biden has called on states to offer vaccines to all adults by May 1 and has said that the United States will have secured enough doses by the end of May for shots to be made available to them. And several states across the country have already begun expanding the criteria for vaccinations.
New York Times analysis of data from the Centers for Disease Control and Prevention.
In Ohio, as of Monday, about 21 percent of adults in the state had received at least one shot and 12 percent were totally vaccinated, according to a Times database.
Gov. Mike DeWine of Ohio, a Republican, announced the expanded eligibility on Tuesday, as well as a goal of working up to administering 6,000 shots a day across the state in the coming days, an increase over the 1,500 shots a day he said the state is currently administering.
With the expanded criteria, Mr. DeWine said another 1.5 million Ohio residents will be eligible for the vaccine on Friday. He also said a new Federal Emergency Management Agency mass vaccination site, the Cleveland State University’s Wolstein Center, would handle shots for more than 200,000 people over the next eight weeks.
“I want to thank the president, President Biden, for making this site available to us,” Mr. DeWine said during a news conference on Tuesday.
according to Times data. Over the past 7 days, Cuyahoga County, which includes Cleveland and is Ohio’s second-largest county, has had the most new cases, and public health experts gauge the risk of getting Covid-19 there as very high, based on a Times analysis. Putting a mass vaccination site in the county and on Cleveland State’s campus, he said, was a deliberate move, given its proximity to some underserved neighborhoods. Mr. DeWine said free transportation to and from the Wolstein Center would be provided.
Ohio will make vaccines eligible to all Ohio residents 16 years and older on March 29.
A year after the coronavirus crisis first closed athletic fields and darkened school gyms, students, parents, coaches and officials have struggled to navigate the challenges of youth sports, weighing concerns about transmitting the virus against the social, emotional and sometimes financial benefits of competition.
For months, a tangle of rules and restrictions that vary by state and sport has forced players and coaches to adapt. Vaccine rollouts and warmer spring temperatures have prompted some states to lift mask mandates and loosen safety guidelines, but health experts continue to urge caution for young athletes amid the spread of possibly more contagious variants of the virus.
Officials have linked virus outbreaks to ice rinks in Vermont, Florida and Connecticut, while a January report from the Centers for Disease Control and Prevention found that two high school wrestling tournaments in Florida led to nearly 80 people becoming infected with the virus, including one adult who died. In Minnesota, at least 68 cases since late January have been linked to participants in school-sponsored and club athletics, including hockey, wrestling and basketball, according to the state’s Health Department.
In at least some cases, the spread did not occur during competition, but at team-related gatherings. Recent data from the N.F.L. and the C.D.C. found that shared transportation and meals were the most common causes of the virus spreading among sports teams.
Many experts agree that youth sports are important for both physical and mental health. That has meant school athletics have continued in some places even when students are learning virtually.
“Sports for me is a huge mental thing,” said Audrey Mann, 17, a high school senior in New Orleans who is a captain of three varsity teams. “I need to exercise and get out. It’s the only way I’m social over this past year.”
U.S. airports had 1.357 million people pass through on Friday, the highest number on any day since March 2020, just after the World Health Organization declared the coronavirus outbreak a pandemic.
The new figures from the Transportation Security Administration will be welcome news for the aviation industry, which has particularly been decimated during the pandemic but was granted some relief in the stimulus bill that President Biden signed on Thursday.
Still, nonessential flights go against the latest guidelines from the Centers for Disease Control and Prevention, which warned last week that even fully vaccinated people should avoid travel unless necessary.
“We know that after mass travel, after vacations, after holidays, we tend to see a surge in cases,” Dr. Rochelle Walensky, the director of the Centers for Disease Control and Prevention, said on Monday on MSNBC. “And so, we really want to make sure — again with just 10 percent of people vaccinated — that we are limiting travel.”
Photos of spring break partyers without masks in Florida spread on social media this week, prompting concern from some local officials. “Unfortunately, we’re getting too many people looking to get loose,” Mayor Dan Gelber of Miami Beach said. “Letting loose is precisely what we don’t want.”
The T.S.A. said it had prepared for a possible increase in spring break travel between late February and April, including through recruitment and vaccination efforts for its own officers. The agency’s employees had previously alleged that the more than 6,000 cases among their ranks were fueled by lax safety measures.
WASHINGTON — A last-minute change in the $1.9 trillion economic relief package that President Biden signed into law this week includes a provision that could temporarily prevent states that receive government aid from turning around and cutting taxes.
The restriction, which was added by Senate Democrats, is intended to ensure that states use federal funds to keep their local economies humming and avoid drastic budget cuts and not simply use the money to subsidize tax cuts. But the provision is causing alarm among some local officials, primarily Republicans, who see the move as federal overreach and fear conditions attached to the money will impede upon their ability to manage their budgets as they see fit.
Officials are scrambling to understand what strings are attached to the $220 billion that is expected to be parceled out among states, territories and tribes and are already pressing the Treasury Department for guidance about the restrictions they will face if they take federal money.
Under the new law, $25 billion will be divided equally among states, while $169 billion will be allocated based on a state’s unemployment rate. States can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects.
based on a formula that considers its unemployment rate rather than its population. Conservative-leaning states, many of which had less onerous coronavirus restrictions and did not shut down as much business activity, claim they are essentially being penalized for prioritizing their economies during the pandemic.
But early analyses of the bill show that both conservative-leaning and liberal-leaning states will receive big chunks of cash. California, Florida, New York and Texas will each get more than $10 billion in aid, according to a Tax Foundation tally.
Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.
many cities are facing budget crunches, state finances have turned out to be relatively healthy.
A New York Times analysis this month found that, on balance, state revenues were generally flat or down slightly last year compared with 2019 as expanded unemployment benefits allowed consumer spending and tax revenues to keep flowing.
“Idaho would potentially subsidize poorly managed states simply because we are using our record budget surplus to pursue historic tax relief for our citizens,” Gov. Brad Little of Idaho said this week. “We achieved our record budget surplus after years of responsible, conservative governing and quick action during the pandemic, and our surplus should be returned to Idahoans as I proposed.”
Gov. Jim Justice, a Republican of West Virginia, criticized Mr. Manchin in an interview this week with CNN.
How Has the Pandemic Changed Your Taxes?
Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.
Mostly. Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.
Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.
Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.
Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.
“He’s hurting his own people in the state of West Virginia,” Mr. Justice said. “I do not condone it.”
The provision is also raising questions about what actually constitutes a tax cut and whether the law could prevent states from other types of tax relief. The language of the legislation appears to offer states little wiggle room.
Jared Walczak, the vice president for state projects at the Tax Foundation’s Center for State Tax Policy, said that the fine print in the law raised many complicated questions for states that, in some cases, would be awarded money for things that they either do not need or that they already had plans to pay for out of their budgets. It is not clear, for example, if a state could use aid money for an expense related to the coronavirus that it was already planning to pay for and then offer tax credits with the additional surplus.
“If the federal government intends to forbid any sort of revenue negative tax policy, no matter what its size, because a state received some funding, that would be a radical federal entanglement in state fiscal policy that may go beyond what was intended,” Mr. Walczak said.
Such questions will largely hinge on how Treasury Secretary Janet L. Yellen interprets the legislation and what guidance the Treasury Department gives to states.
A department official noted that the law says that states and territories that receive the aid cannot use the funds to offset a reduction in net tax revenue as a result of tax cuts because the money is intended to be used to support the public health response and avoid layoffs and cuts to public services. More guidance on the matter is coming, the official said.
The lack of clarity also raises the risk that states use the money for projects or programs that do not actually qualify under the law and then are forced to repay the federal government. States are required to submit regular reports to the Treasury Department accounting for how the funds are being spent and to show any other changes that they have made to their tax codes. The department will also be setting up a system of monitoring how the funds are being used.
Emily Swenson Brock, the director of the Federal Liaison Center at the Government Finance Officers Association, said that the eligible uses of the federal aid appeared to be relatively limited for the states and that some might actually find it challenging to deploy the money in a useful way.
“It’s complicated here for the states,” Ms. Brock said, adding that her organization had asked the Treasury Department for an explanation. “Congress is reaching in and telling these states how they can and can’t use that money.”
Before they receive federal funds, states will have to submit a certification promising to use the money according to the law. They could also decline funding or, if they are set on tax cuts, they could offset them with other sources of revenue that do not include the federal funds.
For many states, the federal money is welcome even if they do not necessarily need it for public health purposes.
Melissa Hortman, the speaker of the Minnesota House of Representatives, said that she was hopeful that the federal government gives states the flexibility to use the money to make up for lost revenue from the virus. She suggested that the state should look to make new investments in education and transportation. Minnesota is expected to have a budget surplus for the next two years and will receive more than $2 billion in aid.
“It’s not too much money,” said Ms. Hortman, a Democrat. “Our country has just lived through a once-in-a-hundred-year pandemic.”