States Restrict Welfare Purchases

July 09, 2012 | USA Today |  Link to article

More states are enacting or considering laws that prohibit people who get welfare cash from spending it on liquor, cigarettes, strip clubs, gambling and guns - laws that even supporters say are difficult to enforce.

Ten states have passed such laws and at least 14 are considering them, the National Conference of State Legislatures says.

Under a new federal law, all states must prevent the use of cash benefits in liquor stores, gambling establishments and adult entertainment businesses by 2014. States that fail to establish policies face cuts in federal support.

Welfare recipients use debit cards to buy things or get cash at ATMs. A report by the House Ways and Means committee cited news reports in eight states about people with welfare debit cards withdrawing thousands of dollars from ATMs in casinos, liquor stores and strip clubs. The report did not estimate how often that happened or how much money was involved.

Last year, 4.4 million people received cash benefits ranging from $200 to $1,000 a month, paid by federal and state governments. The federal government share was more than $16.5 billion.

Food stamps pay for food, and welfare cash is supposed to be for non-food necessities, but states find it difficult to police.

"Until we figure out how to program the machines, it's tough to stop someone from taking cash out of an ATM and buying liquor," says New York state Sen. Thomas Libous, a Republican from Binghamton. His bill to restrict the use of cash welfare passed the state Senate in June but has not been introduced in the Assembly.

The laws are meaningless because they can't restrict how someone spends the cash once it is in hand, says Elizabeth Lower-Basch, a policy analyst for CLASP, an advocacy group for low-income people. "It's a way for legislators to look like they are on top of things," she says. "It plays into people's stereotypes of the undeserving poor who buy things that are wasteful."

In Louisiana, a stalled bill would have barred all ATM cash withdrawals with welfare debit cards and use of the cards in strip clubs or to buy liquor or cigarettes.

Enforcement would be "not simple, but it's not impossible," says the bill's author, state Rep. Cameron Henry, a Republican representing Jefferson and Orleans parishes. It would cost $400,000 to reprogram the cards and machines.

State Rep. Regina Barrow, a Baton Rouge Democrat who opposed the bill, says the state shouldn't restrict access to all ATMs because people still need cash to buy necessities.

Last year, Massachusetts passed a law that prohibits spending cash assistance on alcohol, tobacco and lottery tickets. But it is "not possible to pinpoint what is being purchased, as many retail stores sell a variety of products including food, household items, alcohol and tobacco," says Alec Loftus, a spokesman for the Office of Health and Human Services.

In Massachusetts, clients must pay back misused money, and store owners who knowingly let welfare recipients spend the money on prohibited items can be fined up to $1,000 - but Loftus says no one has turned in any violators.

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