No more strip clubs! State taking modest step to curb EBT abuse

Roundhouse legislators took a step Friday (Feb. 1) to rein in abuse of electronic benefit transfer (EBT) cards that Jim Scarantino of New Mexico Watchdog highlighted in recent months.

In his series of Watchdog reports, Scarantino pored over documents showing the EBT cards — which are supposed to be used for life’s essentials to help needy New Mexico families with children — had been used at such places as the Lotus Nightclub and VIP Ultralounge in Albuquerque, the Skydancer Casino in North Dakota and the Knockouts strip club in Bernalillo County.

On a 16-0 vote, members of the House Judiciary Committee approved a bill that would get New Mexico in compliance with federal guidelines for EBT usage which would prohibit the use of the debit cards in casinos, strip clubs and bars or stores that primarily sell liquor.

House Bill 12 is sponsored by Nate Gentry, R-Albuquerque, and there’s plenty of incentive for the Legislature to pass it because if New Mexico does not get its EBT system in sync with the feds by February of next year, the state stands to lose an estimated $5.5 million in Temporary Assistance for Needy Familes (TANF) funding.

“All this bill does it get us into federal compliance,” Rep. Gentry told New Mexico Watchdog. “Look, we’re going to be out of compliance in February 2014 and unless we act this session we’re at risk of losing $5.5 million for New Mexico’s most needy families.”

Rep. Gentry said he’s worked with Speaker of the House W. Ken Martinez (D-Grants) to fast-track the bill so that low-income recipients of the cards aren’t threatend with a cutoff should the Legislature not meet the February 2014 deadline.

In the committee meeting hearing, Democrats expressed concern that cutting off the use of EBT cards in casinos and stores that serve liquor could harm recipients who live in remote areas but Gentry says the bill is crafted so that stores that sell groceries as well as liquor will not be affected.

Just as with federal guidelines, there is no prohibition against EBT purchases in New Mexico for liquor.

“All we’re trying to do is comply with federal law,” Gentry told the committee.

The bill passed through Judiciary late Friday and now heads straight to the floor of the House of Representatives.

“I’m not sure we’ve gotten to the heart of the matter (of abuse),” said Rep. Cathrynn Brown, R-Carlsbad, during Wednesday’s hearing, “but it is a good first step.”

New Mexico Watchdog examined approximately 200,000 EBT transactions last November and pointed out that the vast majority of the transactions are legitimate. The largest volume of purchases occurred at Walmart stores, followed by grocery stores and discount clothing retailers.

However, there were numerous transactions that raised red flags:

*In a single, random day (Oct. 1, 2012) New Mexico EBT cards were used in 35 different states – as far away as New Hampshire and Florida.

*An ATM at a highway exit outside San Jose, Calif., reported about a dozen withdrawals on the same day using a New Mexico-issued EBT card for a total of $1,920. It would take a family of 25 children to qualify for a monthly benefit at this level.

*Dozens of withdrawls in a two-month period at liquor stores, Hooters restaurants, casinos in and out of state and at strip clubs in the Albuquerque area.

*An estimated 196,000 cards are active each month in New Mexico but the state’s Human Services Department has just one person assigned to monitor compliance with the residency requirement.