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Governor Gets Bill Restricting Use of Welfare Cards

Legislation aimed at curbing the abuse of Electronic Benefit Transfer, or EBT, cards by people receiving public assistance passed the Tennessee House of Representatives 90-2 on Monday.

House Bill 119, sponsored by Terri Lynn Weaver, is now headed to the governor’s desk. The House conformed the legislation to Senate Bill 244, which passed in the upper chamber 30-0 earlier this month. The bill bans the use of a recipient’s EBT card in liquor stores, casinos, gaming establishments or adult cabarets.

Representatives voting “no” were G.A. Hardaway and Johnnie Turner, both Memphis Democrats.

“This bill places the strictest possible limitations on the use of EBT cards,” said Weaver, a Republican from Lancaster. In initial form, HB119 included a prohibition on the purchase of tobacco products, but had to be amended because it would have conflicted with federal law, she added.

Passage of the legislation brings Tennessee into compliance with the federal Middle Class Tax Relief and Job Creation Act of 2012, which is designed to prevent Temporary Assistance for Needy Families recipients from abusing their benefits.

The bill also bans the use of EBT benefits at an ATM located inside a liquor store, strip club, casino, or gaming establishment. In addition, it assigns civil penalties to businesses that sell those products and accept EBT benefits as payment in violation of the law. The fine for a violation by the seller would be $1,000 for the first violation, $2,500 for the second violation within five years, and $5,000 for a third or subsequent violation within five years.

Rep. Vance Dennis, R-Savannah, explained that TANF benefits, which are a cash payment of about $185 on average to an individual, are loaded onto the EBT cards. Currently, there are no restrictions on where that cash money can be used. “So right now, they can use that in a strip club, in a bar, in a casino, the type places that you’re prohibiting,” Dennis said. “Your bill would prohibit in these certain locations that are listed from them getting those funds there. Welfare cash they can get right now wherever they want to use wherever they want.”

“That is correct,” Weaver replied.

Rep. Joe Carr, R-Lascassas, asked if there were potentially any ramifications if the General Assembly failed to pass the legislation. Weaver acknowledged that if the legislation failed to pass the state would lose federal matching dollars, because the Middle Class Tax Relief act required states to adopt the same restrictions as the federal law.

The legislation came after a report was released last summer by the Beacon Center of Tennessee, which documented numerous examples of suspicious card-use by welfare recipients. According to Beacon’s report, EBT cards were swiped at liquor stores, nightclubs, malls, retail outlets, and adult-entertainment establishments, as well as for a hotel stay and UPS services, among others. The free-market think tank reported one transaction at a liquor store totaling $790.

“We applaud Rep. Weaver, Sen. Tracy, Commissioner Hatter, and all those who supported this important effort to restrict the abusive use of EBT cards in our state,” said Beacon Center CEO Justin Owen.

Amelia Morrison Hipps may be reached at amhipps@downhomepolitics.com, on Twitter @DwnHomePolitics or at 615-442-8667.

Obamacare Adversary Calls for More Patient, Doctor Control

A prominent national free-market critic of the federal Affordable Care Act laid out his vision for “curing” America’s “health care crisis” during a private event in Nashville Wednesday hosted by the Beacon Center of Tennessee.

The event was closed to the media, but Goodman spoke with TNReport for a few minutes before the event.

“The biggest problem with the health care market, unlike other markets, is that we have completely suppressed normal market forces,” said John C. Goodman, who leads the National Center for Policy Analysis, a group that promotes private-sector alternatives to government programs and regulations. “As a consequence no one ever sees a real price for anything … and we have a bureaucratic, dysfunctional system.”

The way out, Goodman says, is to liberate the consumer and give patients more control over their own health care spending.

Goodman says changes to the healthcare landscape are possible and points to a recent innovation at Walmart as an example. Earlier this month Walmart announced a program that offers workers heart, spine, and transplant surgeries with no expenses for the worker — as long as the surgery is performed at one of six hospital systems across the U.S.

“That’s an example of an employer doing something pretty radical to step outside the normal, third-party payer system,” he said.

He also said that government requiring individuals to buy insurance opens the door for special interests to take advantage.

“Once you start specifying what the individual has to buy, then all the special interests come in, as they did in Massachusetts. Then you’ll get the acupuncturists, the in vitro fertilization folks and the naturopaths,” Goodman said. “Every special interest will want to be part of the insurance plan, and then it will be very expensive.”

Trent Seibert can be reached at trent@tnreport.com on Twitter at @trentseibert or at 615-669-9501.

TVA Ratepayers Make Up Pension Shortfall

The Tennessee Valley Authority is facing a multibillion-dollar pension shortfall, and it appears the federal utility has been scrambling to shore up the losses with ratepayer cash.

From the Chattanooga Times Free Press:

When investment markets tanked in 2008 and TVA’s pension fund took a nearly $2 billion dive, the tab for making sure there was enough money to cover commitments to 24,000 retirees fell to electric ratepayers. 

Fully funded, TVA’s retirement plan should total $11.5 billion.

Instead, it now stands at $7 billion.

TVA has infused it with almost $1.3 billion since 2009 — ratepayer money.

There’s a bigger problem, though, says Justin Owen with the Beacon Center, a Nashville-based free-market think tank: Pension problem are rampant throughout the country, and politicians are moving too slow to apply fixes.

“The (TVA) story is symptomatic of a larger problem,” Owen said. “What it amounts to us political promises. Now we’re seeing that many of those promises… are empty promises.”

Beacon has studied pension problems across the U.S. recently, looking at how pension bailouts across the nation would affect Tennessee taxpayers.

“We have to stop making these promises in the future,” Owen said. “We can’t afford it.”

He said that public entities need to move to retirement plans similar to the 401(k) plans offered in the private sector.

Watchdog Group’s EBT Abuse Probe Appears to Spark Bipartisan Support for Reform

Gov. Bill Haslam says the state should consider tightening rules for where welfare recipients can use their taxpayer-funded benefits.

“One of the questions people always have about benefits is, are they being used in the right way? I think, obviously, that’s part of our responsibility,” Haslam told reporters on Capitol Hill Thursday.

A recent report from the investigative arm of The Beacon Center found that some people benefiting from the federal Temporary Assistance for Needy Families program were using their allowances at venues including a strip club, bar, tobacco shop, high-end clothing stores and Graceland.

The free-market think tank reviewed thousands of transactions using electronic benefit transfer, or EBT, cards, which work like debit cards. The investigation examined usage in MemphisChattanooga and Knoxville.

Unlike other programs for the needy that are restricted to food products, TANF benefits, as much as $500 per month, can be used in whatever way the beneficiary sees fit.

Haslam said he knew nothing about the reported use of EBT cards but said he would inquire as to whether there is something the state can do to restrict where funds are accessed.

Top House Democrat Craig Fitzhugh agreed that the state may need to tighten the reins on how those dollars are used, although he said the state should stick using the EBT cards because they’re safer than using paper checks.

“I don’t have any problem with tightening those regulations up so the few don’t abuse,” Fitzhugh said. “It certainly gives the whole a bad name.”