AUGUSTA, Maine — They were at smoke shop ATMs when they used their welfare cards to withdraw cash. At race tracks. At tattoo parlors. Even at Disney World-area resorts in Lake Buena Vista, Fla.

One example after another of apparent spending by Maine’s welfare recipients was contained in data released by the state last week.

Lawmakers immediately called it misuse. Abuse. Fraud.

But it can also be called something else: completely legal.

At the center of the controversy are Maine’s EBT cards — electronic benefit cards issued to the poor and loaded with money they qualify for, including TANF benefits (Temporary Assistance for Needy Families, often informally called welfare).

Maine recently instituted rules prohibiting TANF recipients from withdrawing money or using the cards at certain places — specifically, no casinos, liquor stores or strip clubs.

However, under the rules, recipients are still allowed to buy whatever they want elsewhere, even if what they buy elsewhere is the same thing they would have bought in one of the prohibited places, including alcohol, cigarettes and lottery tickets.

In fact, a brochure for TANF recipients and the website that recipients use to access their accounts both make one thing clear: “Any item may be purchased using your cash benefit account.”

It’s an allowance that has been around as long as the TANF program itself.

Some say it’s time for that to end.

“Obviously, the public is outraged to think these abuses are going on and there has been no action here in this state Legislature to try and curb this growing problem,” said Senate Republican Leader Michael Thibodeau of Winterport.

Others agree that TANF recipients should not be buying beer and tobacco with taxpayer funds, but worry that the questionable transactions released by Gov. Paul LePage last week — which represent about three-tenths of 1 percent of all TANF purchases and withdrawals in 2012 and 2013 — have been politicized to gain points.

Maine, they say, should focus its attention on the bigger issue of helping people out of poverty.

“Nobody wants to see this money go to buy alcohol and cigarettes. Absolutely nobody. I think that’s a distraction, a smokescreen the governor is putting up,” said House Speaker Mark Eves, D-North Berwick. “Look at the governor’s track record on these programs [to get people out of poverty]. They’re a failure.”

From checks to EBT cards

TANF, a federal program, was signed into law by President Bill Clinton in 1996 as part of welfare reform and as a successor to Aid to Families with Dependent Children, or AFDC. Under TANF, the federal government gives each state a block of money and, in return, states are responsible for designing and implementing programs to help poor families become self-sufficient.

Maine gets $78 million a year.

TANF’s trademark is a cash benefit. When people talk about traditional “welfare,” TANF and the Supplemental Nutrition Assistance Program, or SNAP (once called food stamps), are often what they mean.

For years, TANF benefits were sent by check or deposited directly into the recipient’s bank account. SNAP benefits were given out as food coupons. In the late 1990s, the federal government started requiring states to switch from food stamps to EBT cards. When the food benefit was loaded on the card, the recipient could use it at grocery stores and other allowable places, much like a debit card.

Some states, including Maine, also started loading most people’s TANF benefits onto the card. While SNAP benefits could only be used at certain places and for certain items, TANF benefits could be used anywhere for anything. And if a store or service provider didn’t take EBT cards — the recipient’s landlord, for example — the recipient could use the card to withdraw the benefit in cash from an ATM.

About 7,700 Maine families, including about 13,000 children, get TANF. The average benefit for a family of three is $415 a month.

In 2012, the Obama administration made a new requirement. It told states they had to enact policies that would prevent TANF-loaded EBT cards from being used in liquor stores, casinos and strip clubs. That year, Maine created a law that did just that. Starting August 2012, it became illegal in Maine for the card to be used in gambling facilities, adult entertainment establishments or any store where liquor sales account for 50 percent or more of gross revenue. The law prohibited the use of EBT cards at ATMs at those locations as well, according to DHHS.

However, the card can legally be used anywhere else that accepts it. Cash withdrawals at ATMs elsewhere are OK, too. Furthermore, Maine’s current law contains no language that outlaws withdrawing EBT cash from an ATM elsewhere and then using the cash at a liquor store, casino or strip club.

Experts say the cash option is important because some places don’t take EBT cards. If a parent needs to pay the rent, get a child’s hair cut or hire a babysitter while at a job interview, for example, they may have to have cash.

The brochure given to TANF recipients and the website they use to access their balance both make a point of that allowance. “Any item may be purchased using your cash benefit account,” they say.

Or said.

Two days after DHHS was contacted for this story by the Sun Journal last week, the website was changed.

“I appreciate you calling this to our attention as this is not a website that DHHS maintains, and it is critical that we update this information,” DHHS spokesman John Martins wrote in an email.

The site, which is run by a DHHS contractor, now details the 2012 state law and notes: “TANF cash benefits are to be used for the purchase of items to help parents and their children with the basic needs of everyday living and using the benefits for any other purpose is against the program’s intent. Benefits used to meet the program’s intent include food, clothing, shelter, utilities, household goods, personal care items and general incidental expenses. Purchases such as lottery tickets and tobacco products do not meet the intent of the program.”

Although the new language notes that lottery tickets and tobacco products don’t meet the intent of the law, it is still legal to buy them with TANF money.

Although the law that banned liquor stores, strip clubs and casinos went into effect in August 2012, DHHS officials said the department still had to promulgate rules to implement the law and those rules didn’t come until June 2013. They are still working on changing documents to reflect the new law.

Officials said they plan to replace the old brochure with a form that TANF recipients will have to sign to acknowledge they’ve been told what TANF money should be used for and what the penalties are for illegal use. That form has not yet been fully drafted.

DHHS officials pointed out that new TANF recipients receive handbooks that include information about what their TANF dollars should and shouldn’t be used for. New TANF recipients also must go through an orientation that includes a PowerPoint presentation that, among other things, outlines the new law.

Officials acknowledge that some people who get TANF went through the orientation before the law was signed. But, they said, orientation has for years included information on TANF’s intent — it’s supposed to be used for food, shelter and basic living expenses — even if that orientation didn’t focus on a specific law.

And besides that, they said, TANF recipients are all poor families with children. Parents should already know it’s bad to spend their money frivolously when their children need food and diapers.

“The reality is these are people who qualify based on being poor and, really, if you’re looking to do what’s right by your children and families, I don’t know that a website saying ‘You can use it for anything’ would put you in a position where you would have the cash to use it for alcohol,” Martins said. “It’s common sense.”

‘This is something we will discuss’

Last week, Gov. LePage released a list of more than 3,650 questionable EBT card transactions, from a total of more than 1.1 million transactions, that occurred between Jan. 1, 2012, and Nov. 15, 2013. The bulk of the questionable transactions took place at smoke shops. Others took place at retailers that primarily sell liquor, at out-of-state stores and one — for $10 — at the medical marijuana dispensary in Auburn.

The governor’s office also released an extra year’s worth of data going back to 2011. That year includes, among other questionable transactions, $820 in the Disney World area.

It is unclear how many of the questionable transactions represented actual fraud, misuse or illegal activity. Although the locations where the cash was withdrawn were tracked, the items purchased with the cash weren’t. A number of the businesses on the list, including retailers that sell liquor, said they don’t accept EBT cards, but they do have an ATM on site.

Some neighborhood stores maintain low ATM fees, and it’s possible that residents prefer to withdraw cash at a local, low-fee site rather than at a bank.

And because the law didn’t go into effect until August 2012 and the DHHS rules didn’t take effect until halfway through 2103, many of the transactions legally occurred before that.

But regardless of whether or not transactions at liquor stores, strip clubs and casinos took place before Maine prohibited them, such transactions are not in line with the intent of the law and hold the possibility for fraud, misuse or illegal activity.

Other states have encountered similar problems, and in recent years — particularly after the federal push — many have tried to make changes.

According to the National Conference of State Legislatures, at least 20 states have placed some kind of restriction on EBT cards. That includes Maine, with its 2012 law on casinos, strip clubs and liquor stores.

Among the 19 other states with laws, seven have fewer restrictions than Maine — including New York, which prohibits the card’s use only at gaming establishments. Six have more restrictions — including Massachusetts, which prohibits purchases from tattoo parlors, manicure shops, rent-to-own stores, jewelry shops and cruise ships, among other places.

In 2013, at least 30 states put forth proposals on the issue and nine passed laws. So far in 2014, three states are dealing with legislation.

Colorado is expanding its list of restrictions to include marijuana shops and adult entertainment venues.

Kentucky has proposed limiting the use of benefits for alcohol, tobacco, casinos, tattoos, lottery tickets and other gambling, adult entertainment and psychic services. It is also considering a photo ID requirement.

Missouri has proposed, among other things, making recipients ineligible for benefits if they withdraw funds at a casino or other gaming establishment.

The national Children and Families Program director said she expects more proposals to come as the year progresses.

Last session, the Maine Legislature considered an amended bill that would have uniformly prohibited the use of TANF money to buy alcohol and tobacco, no matter where it was sold. It also would have required TANF recipients to hold on to their cash-transaction receipts for 12 months in case DHHS audited them.

The bill failed, largely along party lines.

LePage has said he plans to propose changes to the program this year in an effort to prevent fraud, including a redesign of the EBT cards so they bear the card owner’s photo.

However, Maine Assistant Attorney General Leanne Robbin, who has worked on EBT card-trafficking legislation in the past, said such a measure could prove tricky since TANF recipients — sometimes sick or disabled, or caring for a sick or disabled family member — are allowed to give their card to someone else to make purchases or withdraw cash on their behalf.

And, she said, the measure’s ability to prevent fraud would only be as good as the enforcement. Card holders must enter their PINs to make purchases or withdraw cash, she said, and that’s considered the card’s safety measure. As long as the card-holder enters the correct PIN, stores are not required to seek a photo ID.

“As the cards are used now, I don’t see that photos will necessarily be relevant,” Robbin said.

LePage has also said he plans to submit a bill that would put greater limits on where recipients can spend TANF money in an effort to curb the purchase of alcohol, cigarettes and lottery tickets. He said he would also like to limit where recipients can use their cards outside Maine. He made that announcement in mid-December, weeks before the DHHS data release.

LePage’s spokeswoman recently declined to talk about the proposal or to say whether it is still being considered.

“That is something we will discuss in the upcoming days as the bills are finalized,” Adrienne Bennett said in an email.

Different changes

Some EBT card-users say they’re concerned about fraud and misuse, and they’d like to see change, too. But their changes differ from the governor’s.

One Farmington EBT card holder, who used to get TANF until she reached the program’s five-year limit, said she would like welfare recipients to be required to show receipts for their purchases.

A Dixfield single mother, who has received TANF in the past and now elects to receive only SNAP, said she would like to see a ban on cash withdrawals.

A Rumford woman, who receives SNAP benefits for her foster child, said she would like to see better vocational rehab.

Democrats, too, say they would like to see changes. Their changes also differ from the governor’s.

Two days after the governor released his list of questionable EBT card transactions, Senate President Justin Alfond, D-Portland, and Eves, speaker of the House, wrote a letter to Maine Attorney General Janet Mills urging her to prosecute if any of the transactions are found to violate the law.

In an interview this week, Eves echoed the sentiment.

“Absolutely no abuse should be tolerated and if there is abuse, it should be prosecuted,” he said.

Eves’ own welfare-reform bill became law without the governor’s signature last summer. It requires DHHS to assess recipients’ needs and to coordinate the training and tools they need to find work.

But he believes the focus on 3,000-plus possibly problematic TANF transactions is a political ploy.

“I think this is just a continuation of the governor’s failed policies,” Eves said. “More people are living in homelessness. More people are accessing our food pantries, our soup kitchens. More people are living in poverty and homelessness than are finding jobs, and that is a problem.”

Eves noted, “We need to be focused on solutions. And that is making sure people have good-paying jobs, access to education. That’s how people are going to climb out of poverty.”

His solution: Expand Medicaid so very poor adults can get healthy enough to work, and raise the minimum wage so workers can live without state help.

“I know that we’re going to be focused on this throughout the session and throughout the campaign, is my assumption,” Eves said.

“But, really, my interest is really focusing in on, ‘What are the solutions [to poverty]?’” he said. “If you’ve identified abuse or fraud, go after it. Prosecute it. Because there should be no abuse or fraud. But let’s talk about the solutions.”

The governor’s office took issue with Eves’ assertions that he’s not doing enough to help people out of poverty.

“The Democrats think that expanding welfare is economic development,” spokesman Peter Steele said in an email. “If that were true, Maine during the [Gov. John] Baldacci years would have had the country’s best economy. Liberals over the past decade purposely made access to welfare programs easier and less accountable, encouraging Mainers to stay in poverty. Their policies created the problems that Gov. LePage is now trying to fix.”

Steele added, “No one in the Legislature — no one — knows the devastating effects of poverty more than the governor. That’s why he is focusing on welfare-to-work programs to lift Mainers out of poverty. Since he took office, more than 8,000 jobs have been created. Maine’s unemployment rate is the lowest since 2008.”

A spokesman for the AG’s Office said Mills had received the letter from lawmakers urging prosecution of anyone violating Maine’s new EBT law, and said the office is “working to address all angles.”