Proposal allowing treasurer to withhold certain federal payments draws legal concerns; members favor study

Representative Karen Ebel introduced HB1411 as a mechanism to provide the state treasurer authority to withhold certain payments to the federal government when the state itself is being deprived of federal aid. She framed the bill as an effort to identify proportional responses to situations where federal funding is withheld.

Representative Griffin sharply challenged the bill's legality, warning it could expose a treasurer to criminal liability if the bill were construed to withhold federal payroll withholdings or other funds that are federally protected. "It's likely that this would end up with a state treasurer in handcuffs and being hauled off to jail because it's illegal for anyone to withhold money that's been withheld from employees for Medicare FICA withholdings," Griffin said.

Sponsors and other members responded that the bill might be narrowed to categories of state receipts other than payroll withholdings and that an interim study could be used to identify lawful, proportional responses and to assess municipal impacts such as lost federal reimbursements to towns. Members requested examples of past incidents where federal funds were withheld and asked the sponsor to provide details on amounts and durations so the committee can evaluate options before pursuing formal legislation.

The committee agreed to pursue further study rather than immediate passage; no vote was taken.