Bill Restricting EBT Cards Scaled Back

Several proposed restrictions on the use of electronic benefit transfer cards have been dropped from proposed legislation so that it will conform with federal law, prompting complaints from some senators.
As originally filed, SB244 declared that the EBT cards, used as a debit card to provide welfare payments and food stamps, could not be used in businesses primarily selling tobacco products, tattoos or “psychic services.” Those references were deleted in an amendment presented to the Senate Health and Welfare Committee last week at the urging of state Department of Human Services officials.
Remaining are provisions covering liquor stores, “adult cabarets” and “casinos or gaming establishments.”
Nathalie Essex, assistant general counsel for the Department of Human Services, told the committee that a law enacted by Congress last year specifically authorizes states to impose the remaining restrictions, but declares states going beyond the authorization can lose federal funds. Legislative staff says the original version would “jeopardize” almost $10 million in federal money now sent to the state.

Responding to a suggestion that the bill had been “gutted,” sponsoring Sen. Jim Tracy, R-Shelbyville, said, “I wouldn’t call it ‘gut,’ but it did change some. … I personally would like to go further, but we are staying within the bounds of what we can do.”
He said the bill at least “puts some teeth” into current laws that already prohibit use of the cards to buy alcohol, tobacco and other nonessential items.
He and other legislators say they get frequent constituent complaints about apparent abuse of the cards.
Sen. Bo Watson, R-Hixson, observed that casinos and “gaming establishments” are illegal in Tennessee, so “we’re putting something in the law that doesn’t even exist in the state.”
At the same time, Watson said a recipient could use an EBT card to get cash at a convenience store, then use the cash to buy a lottery ticket. Essex acknowledged that was possible.
“This has a very narrow application, as compared to the original bill that was filed,” Watson said.
The bill requires a person receiving an EBT card to repay any money received at a prohibited establishment. It also imposes new penalties on businesses accepting EBT cards in violation of the law — $1,000 on first offense, $2,500 on second offense and $5,000 on subsequent offenses. Offending establishments are also subject to loss of their state business license.
The bill would not take effect until July 1, 2014. Tracey said that will allow both federal and state officials to promulgate rules on implementing the new restrictions.
Essex said it is possible that the federal rules may allow new restrictions — on tobacco, for example — and state rules could be adapted to cover them if that happens within the next year.
Tracy said the EBT cards are still better than the old system wherein recipients simply got a check, which they could cash and use for any purpose.
“At least now with the cards, when they swipe those cards, we know where the cards are being swiped,” he said.
During the discussion, most members of the committee indicated they were ready to approve the revised bill as the best possible under the circumstances, but a final vote was postponed until this week.

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