Orlin Wagner / AP

New Kansas welfare spending law is ‘tax on the poor’

Legislation limits ATM cash withdrawals of benefits to $25, ‘taxing’ the poor for each transaction

Republican Gov. Sam Brownback signed into law Thursday restrictions on how much cash Kansas welfare recipients can withdraw from ATMs using their benefits cards, a move some critics slammed as a “tax on the poor."

The measure set the withdrawal limit at $25 per transaction. With an average withdrawal fee in U.S. of $4.35, according to bankrate.com, and with most ATMs not dispensing $5 bills, the fee amounts to about a 20 percent levy on the poor.

The law also bans poor families from using welfare money to attend concerts, get tattoos, see a psychic or buy lingerie. The list of don'ts runs to several dozen items and is part of a growing number of laws in more than 20 states that curtail people’s spending patterns.

The measure passed by the Republican-dominated Kansas legislature appears to include the most exhaustive list of welfare spending curbs in the nation, according to officials at the state’s Department for Children and Families.

State officials said that it is difficult to track how often welfare assistance is used for items on the state's new list, because recipients can use their benefits cards to withdraw cash. The new limits on ATM use are supposed to prevent the poor from spending tax dollars on luxuries, state officials argue.

But the limit will significantly harm welfare recipients’ spending patterns, according to Elizabeth Lower-Basch, director at Center for Law and Social Policy (CLASP), an advocacy group for low-income people.

“It’s really disconnected from the reality of people’s lives. The single biggest expense that people have is rent,” said Lower-Basch, adding that a $25 limit would likely result in multiple trips to an ATM until the total amount of rent money is withdrawn. “They’re just going to have to go every day to get their rent money.”

"Also," she added, “No ATM gives you a $25 bill, so the real limit is $20. “It’s a mess.”

Many banks charge additional fees for every cash withdrawal with the government-issued social assistance cards, accruing millions of dollars each year. 

California welfare recipients, for example, spent $19 million on the fees last year, effectively shifting public funds from where they are most needed to banks, according to a report from the California Reinvestment Coalition, an advocacy organization for low-income families. The total fee of using an Electronic Benefit Card at an ATM can be up to $4 in most states, the report found.

“It’s a tax on the poor, basically, because they are charged every time they withdraw funds from the ATM. Welfare benefits are not very high in the first place, so this just takes money out of poor people’s pockets,” Lower-Basch said.

The Kansas list with restrictions is part of a broader welfare law taking effect in July that Brownback and his allies say is aimed at moving poor families from social services into jobs.

"We want to get people off of public assistance and into private-sector employment, and we've had a lot of success with that," Brownback said during an interview this week with The Associated Press.

A 2012 federal law requires states to prevent benefit-card use at liquor stores, gambling establishments or adult-entertainment businesses.

At least 23 states have additional restrictions on how cards can be used, mostly for alcohol, tobacco, gambling and adult-oriented businesses, according to the National Conference of State Legislatures (NCSL).

A few states — not Kansas — prohibit buying guns, according to the NCSL, and a few ban tattoos or body piercings. Massachusetts prohibits spending on jewelry, bail bonds or "vacation services." A 2014 Louisiana law bars card use on cruise ships, which is also on the Kansas list.

A 2014 federal report said a review of eight states' data showed transactions with benefit cards at liquor stores, casinos or strip clubs accounted for less than 1 percent of the total.

"The list has attracted attention because it feels mean-spirited," said Shannon Cotsoradis, president of the advocacy group Kansas Action for Children. "It really seems to make a statement about how we feel about the poor."

Phyllis Gilmore, secretary of the Kansas Department for Children and Families, said her state's list is a “composite” of others and has educational value, sending the message that cash assistance should be used for necessities.

The department said it reclaimed $199,000 in cash assistance from 81 fraud cases from July through February, but said most involved questions about eligibility. Kansas provided $14 million in cash assistance during the same period.

“Every dollar that is used fraudulently is a dollar that is not going to an American who is struggling,” said state Sen. Michael O'Donnell, a Wichita Republican who supported the bill.

The number of cash assistance recipients in Kansas has dropped 63 percent since Brownback took office, to about 14,700 in February. Brownback said the decline confirms the success of his policies, but critics note that U.S. Census Bureau figures show the state's child poverty rate remaining at about 19 percent through 2013.

Al Jazeera and The Associated Press

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