Recipients of state-funded cash assistance will no longer be permitted to withdraw money with electronic benefit cards from ATMs in bars, strip clubs, casinos or liquor stores, Gov. Paul LePage announced Monday.
The restrictions, imposed by the state Department of Health and Human Services, add teeth to a law that LePage signed in 2012 to prohibit cash withdrawals at such businesses.
John Martins, a DHHS spokesman, said the department hadn’t requested transaction data until this year, and without data about where the cards were being used, could only educate card holders about the rules and leave them to police themselves.
“If there was ATM use at a prohibited location and it was reported to us, we most certainly would have acted,” Martins said. “Now, however, with access to the transactional data, we have more analytical capacity and further ability to take action.”
In January, LePage’s office made public thousands of EBT card transactions, which preceded a push by the Republican governor to enact a package of welfare reform bills. Most of his bills were rejected by the Legislature, where Democrats hold the majority.
Martins called the new enforcement step a “common-sense measure” to protect beneficiaries and businesses. The governor’s office did not respond to requests for comment on why LePage, who is running for re-election in November, made the announcement Monday.
“This is not about politics – it’s about making sure that each public dollar spent on welfare is used appropriately,” LePage said in a prepared statement. “These tax dollars are designated for daily necessities like diapers and healthy meals that vulnerable families and children need to survive. To think these dollars may have been spent on liquor and adult entertainment is incomprehensible, and this administration will not tolerate it.”
The DHHS has blocked the use of benefit cards in ATMs at 44 locations statewide and plans to expand to more than 200 locations by August, LePage said in his statement. He said any attempt to use a card at a prohibited location will be treated as a violation, and the card holder will lose benefits for a year.
Using data released by the state in January, the Portland Press Herald calculated that from June 1, 2012, through Nov. 15, 2013, card holders made $44,480 in ATM withdrawals at the 44 businesses where the cards are now blocked.
The state is paying its EBT card vendor, Xerox, $92 per ATM to enforce the law. At that rate, it will cost Maine taxpayers $18,400 to prohibit withdrawals at the 200 locations.
DEMOCRATS SAY TIMING IS POLITICAL
In his statement, LePage took a jab at Democrats for not supporting his bills during the legislative session that ended May 2. LePage’s plan would have added more stringent work requirements for welfare recipients, and new restrictions on using cash assistance for bail, lottery tickets, alcohol or tobacco.
Democratic lawmakers also rejected a plan to eliminate the Parents as Scholars program, which provides cash assistance to parents who seek two- or four-year degrees. Democrats did agree to add smoke shops to the list of places where EBT cash withdrawals are prohibited, but LePage vetoed that provision.
Democrats said the governor’s announcement Monday was politically motivated, and too late.
In a response to the announcement, party leaders asked what the LePage administration has done with added resources to fight fraud.
“The governor says this was a priority, yet he has waited two years to begin implementing the law – right in time for the election,” said Jodi Quintero, spokeswoman for House Speaker Mark Eves. “Don’t forget, this administration has been given an additional $750,000 to fight fraud, yet it has done very little. Instead, the governor politicizes our anti-poverty programs and vilifies the working poor.”
U.S. Rep. Mike Michaud, a Democratic candidate for governor, criticized the timing, saying it was a political ploy.
“Mainers deserve to know why it’s taken Gov. LePage more than two years to enforce a law that passed with unanimous support in the Legislature,” Michaud said in a written statement. “This is either another example of mismanagement on his part or more election-year politics. Regardless, the voters deserve better. Every dollar that is misused is less available for someone who’s trying to get shoes for their child, put food on their table or pay their heating bill, which is why my administration will not tolerate fraud in any level of government.”
Eliot Cutler, an independent candidate for governor, issued a brief statement through his spokeswoman, Crystal Canney.
“That’s great,” she said of LePage’s announcement, “but it took four years to do this?”
LEPAGE A WELFARE ABUSE CRUSADER
State Rep. Drew Gattine, D-Westbrook, who has spent more than two decades rooting out inefficiencies, fraud and abuse in Maine’s and other states’ benefits systems, said the DHHS could have obtained the data on card use two years ago, if it had asked for it.
“It doesn’t really ring true to me, unless they’re saying they intentionally kept themselves ignorant,” Gattine said. “The whole reason (the DHHS) would have asked us two years ago to put that law into place is because they suspected people were using their cards in these locations.”
During the legislative session, Gattine sponsored a bill to require the DHHS to provide legislators with annual reports to show how the department is targeting welfare waste and fraud, how much money is recovered from fraud investigations and whether vendors employed by the state are cutting corners or overbilling the system. The governor vetoed the bill.
LePage has made welfare abuse a key issue in his re-election campaign. He has looked closely at the use of EBT cards, which allow recipients of Temporary Assistance for Needy Families to withdraw cash from ATMs.
LePage has said repeatedly that the system is too easy to abuse, and that there is no way for regulators to prevent recipients from trading their cards for drugs, or withdrawing money to spend on alcohol, tobacco and other prohibited items.
OTHER STATES TAKING SIMILAR ACTION
Adrienne Bennett, spokeswoman for LePage, said the administration is taking action independent of what the 2012 law requires.
“The law didn’t require this activity on our part, rather it is an extra step to make sure this doesn’t happen, and protect the card member from using it in the first place,” she wrote in an email.
Bennett did not respond to a question about why ATM use was not blocked sooner.
Although the new measures are designed to prevent card holders from withdrawing money, the EBT system is not foolproof. A card holder could still withdraw cash from an ATM in an approved place, such as a bank, then spend it at a business where the cards are not accepted.
Statewide, about 224,000 EBT cards are active. In 2012, the DHHS appropriated about $192.5 million for Temporary Assistance for Needy Families and its related program, ASPIRE, which helps recipients look for jobs that pay enough to let them leave the welfare rolls.
The LePage administration said that Massachusetts and California have imposed similar restrictions on card use, and that Maine consulted with California officials before designing its new ATM blocks.
Guy Christian, president of the California Welfare Fraud Investigators Association, said similar reforms are taking hold nationwide.
“We do hear from other states where it’s happening, but a lot of them are taking the approach that Maine’s taking, or have already done it,” he said.
Matt Byrne can be contacted at 791-6303 or at: