Kansas Poor Tax A Reflection Of Nationwide Fiscal Crisis

Tyler Durden's picture

In the course of covering America’s deepening state and local government fiscal crisis, we’ve touched on Kansas quite a bit. 

As a reminder, an ill-fated tax cut ‘experiment’ by Governor Sam Brownback contributed to a rather large funding gap which has in turn squeezed the public sector to the point that some schools have had difficulties making payroll. This well-publicized scenario has left many Kansans disgruntled as evidenced by the now famous Boss Hawg’s Bar-B-Q incident wherein Brownback’s waitress famously refused gratuity from the Governor, instead advising Brownback to “tip the schools.” 

Here’s what the situation looks like visually (note that the tax cuts came in 2012):

In early April, Brownback signed a welfare reform bill into law. The goal, the Governor said, is to “get people back to work, because that’s where the real benefit is getting people off public assistance and back into the marketplace with the dignity and far more income there than the pittance that government gives them. And I hope we don’t lose track of the primary focus of what we’re after.”

Well, it turns out some observers did “lose focus” because the bill contained a number of rather ‘innovative’ riders, one of which limits the amount of cash that can be withdrawn from ATMs with state-issued assistance cards to $25 per day.

The idea, according to Kansas, is to ensure that poor people spend public assistance on necessities, where “necessities” must not mean rent because after all, rent costs more than $25 and because there’s a $1 fee for each withdrawal, plus the standard ATM fee for those with no checking account, each visit can cost as much as $3 (or more) and because ATMs don’t dispense 5s, a person looking to spend say, $300 of public assistance on rent would need to go to the ATM 15 separate times incurring $45 in fees. 

A single mother with two children in the state would receive around $400 in assistance, meaning that, in the scenario presented above, the ATM limit amounts to a 10% reduction in monthly benefits.

As we noted last month, it isn’t at all clear how this policy will lead to a reduction in the number of people on welfare: “This will only serve to further impoverish recipients, making it more likely that they will remain dependent on the public purse, thus driving up the cost of the program for taxpayers in the long run.”

Phyllis Gilmore, Secretary of The Kansas Department for Children and Families, doesn’t agree. In fact, Phyllis thinks this is the kind of thing that other states should try, because after all, poverty is a real inconvenience for everyone:

“We encourage other states to look to Kansas on how to help end government dependency… government dependency [is] a disservice to the individual, a disservice to our culture and certainly a disservice to the taxpayer.”

 

(Brownback and Gilmore signing the welfare reform bill into law)

 

The bill (which also bans poor people from spending public assistance on going to the movies or going swimming) has since garnered quite a bit of national attention. Here's some additional color on the issue from Bloomberg:

Kansas is in trouble. After slashing income taxes in 2012, the state faces a revenue gap of more than $400 million. Republican Governor Sam Brownback and state legislators are debating how to make up the shortfall. So far they’ve agreed on one way to control how state money is spent. Starting in July, people on the dole will be limited to a single ATM withdrawal of no more than $25 per day. 

 

A September 2014 survey by the Pew Research Center found that 73 percent of Republicans feel the government can’t afford to do much more to help the needy, compared with 32 percent of Democrats. “If you look at cycles in history, you’ll see that there is compassion, then compassion fatigue, and then blame,” says Patricia Baker, a senior policy analyst at the Massachusetts Law Reform Institute, a Boston nonprofit that researches poverty. “This happens because there’s impatience with the solution.”

 

The number of families receiving cash through Temporary Assistance for Needy Families (TANF), the federal-state aid program that grew out of the 1996 federal welfare reform law, peaked in 1994 at 5.1 million families, according to the Congressional Research Service. It’s since plummeted to 1.5 million at the end of 2014. In Kansas 6,478 families were on welfare at the end of last year, down from 7,553 in 2013. Monthly payments for a family of three range from $386 to $429, depending on a county’s population and cost of living.

 

The restrictions on ATM withdrawals could eat up as much as 10 percent of that in transaction fees, according to Shannon Cotsoradis, president and chief executive officer of the advocacy group Kansas Action for Children. She says state lawmakers acted on anecdotes about TANF cards being used at casinos and, in one instance, on a cruise ship. “This is not a data-driven policy decision,” she says. “This is a solution seeking a problem.”

Bloomberg goes on to note that as states' fiscal crises worsen, officials are turning increasingly to welfare cuts to plug funding gaps:

Kansas is among several Republican-controlled states that have recently cut or limited public-assistance funds. In Arizona, which faces a $1 billion budget shortfall, lawmakers voted on May 18 to limit welfare to a year, the shortest window in the nation. On May 5, Missouri’s Republican legislature overrode Democratic Governor Jay Nixon’s veto to enact a bill that cut thousands of low-income families from aid rolls by reducing how long people can claim cash from five years to fewer than four. Michigan’s GOP-controlled legislature passed a bill on June 2 that strips cash assistance from families with chronically truant children. “During the recession there were lots of blue states, for fiscally driven reasons, that were cutting welfare,” says Liz Schott, a senior fellow at the liberal Center on Budget and Policy Priorities, a Washington think tank. “This year’s cuts feel more ideologically driven.”

Partisan politics aside, the cuts, more than anything else, are a reflection of the nation's state and local government fiscal crisis, which has already claimed Chicago (in the form of a devastating Moody's downgrade) and threatens at least 22 states, including Kansas. 

With The Illinois Supreme Court having set a precedent that effectively rules out pension reform as a solution, states may turn to pension obligation bonds. If this becomes the go-to, can-kicking option, you can bet the crisis will eventually return with a vengeance, and with it, more and deeper cuts.

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Ignatius's picture

Gut the manufacturing economy and blame the policy's victims.

Set up like bowling pins.

ACP's picture

Maybe these folks should supplement their free money by getting a job.

Crazy huh? When a job is actually a supplement?

 

N2OJoe's picture

Oh but how will the schools ever fill their their bottomless pit budgets without MOAR taxes!?!?!

Better send out the posse to collect. Oh um, it's for the children!

0b1knob's picture

People on welfare can use the cards just like debit cards to buy food clothing and other necessities. 

The fee is ONLY on cash withdrawals.   It is discourage the use of welfare money for drugs, alcohol, cigarettes, hookers, lap dances and other prohibited things. 

BuddyEffed's picture

The fees effectively amount to a bail in of the poorest class.

Talk about being kicked when you are down!

johngaltfla's picture

Andddddd crack and Ho-Ho sales crater in Kansas....

vamper's picture

A few months ago I watched as a girl purchased 3 big cans of red bull, not sure what the value is because I refuse to spend that much on a drink... She then asked if she had any "allowance" and pulled 25ish bucks from the card and purchased 3 packs of cigs 2 menthol 1 regular. All at a gas station. I walked up, paid for my .99 cent tea, and gas, and shook my head on my way to work.

readmylips's picture

mind your own business citizen. pay your taxes to buy her red bull. in general, just stop paying attention.

Superdave532's picture

So, basically a dry run for the rest of the economy? 

Freddie's picture

America needs 50 million more illegal aliens for the elites Army.

Augustus's picture

0b1knob

You are exactly correct in describing how the cards can be used.  This is simply another of the generally misleading article from ZH.  It seems that ZH should know better than to base a write up on something found on Bloomberg.  Any good Republican idea is immediately trashed by the writers there who are engaged in a libtard circle jerk.

The welfare recipients can get their full benefits with NO Fees deducted, just use the card properly.

Urban Redneck's picture

I don't see a Visa or Mastercard logo on the cards (which would make paying utility bills in my part-time 'Murican neighborhood a non-starter).

I do, however, see OFFICIAL Kansas government literature that talks about making cash withdrawals to pay for child care.

 

What State benefits exactly are delivered with the cards?

 

Edit: The official user manual for the cards specifically talks about CASH BENEFITS and FOOD BENEFITS and how one ALREADY cannot withdraw cash at an ATM against food benefits.  

So why does the government want to limit withdrawal of CASH benefits to $25 per transaction, when the government is charging $1 per transaction, on top of what the ATM machine owner is charging?  

 

Stoploss's picture

You don't need tax subsideis if you have organic job creation and wage increases...

That's how the republicans get votes...

Which is a damn sight better than flooding the country with shit people to get the democrat votes...

At least the tax breakers try to spend some if they happen to be 100% completely healthy, otherwise every fucking penny, your first born, are now what is required for SHITTY HEALTHCARE.

That leaves, oh, about a 12 foot hole blown into the side of the family, because here in fucktardland, it's all about destroying the families.

MISSION ACCOMOPLISHED YOU HEAD NIGGER IN CHARGE........

Headbanger's picture

The Repubtards wrecked this country too with their "free trade" bullshit to send good paying jobs to cheap labor off-shore

So both parties are destroying families

 

Pickleton's picture

Yea, those republitards like NAFTA, GATT signer, Bill Clinton....

 

Deathrips's picture

Red and Blue team circle jerk creates results for the moneychangers....for you ..not so much.

 

RIPS

FreeMoney's picture

Nail meet hammer.  Thanks Rips.

readmylips's picture

Bingo! The world hasn't changed much in the past 2015+ years. The moneychangerbergs still make money regardless of the welfare of the cattle.

readmylips's picture

Exactly.

 

"NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement."

- Bill Clinton

Augustus's picture

headbanger,

the damage must have been long lasting.

The NAFTA agreement was seen by democraps as one of President Clintoon's finest accomplishments.

The overwhelming praise for it is what has prompted O'Bummbo to negotiate his secret Pacific free trade agreement.

And just to make certain that there is a limit on good paying jobs, Democrat President O'Bumbo has used illegal orders to import more illegal workers.

SmittyinLA's picture

"That's how the republicans used to get votes..."

There fixed it. 

Kansas is the new devil because they oppose criminal invasion with benefits, plus their secretary of state Kris Kobach is the devil incarnate.

giggler321's picture

Even of they all some how got a job tomorrow say as queue tenders for the FEMA camps, do you think they'll cut your taxes?  f*** no they'll spend it on monitoring procedures or a like to make sure those in work are actually working.

When these parasites and I'm talking gov start feeding on theirselves it's game over in sight.

BlowsAgainsttheEmpire's picture

Here's something that's crazy - there are about 3 people looking per each available job.

 

https://research.stlouisfed.org/fred2/graph/?g=1dQ7

 

So what do the other 2 do?

rwe2late's picture

 ACP

Your instruction to

"these folks"

 

must also include instruction to employers

to hire every one who applies.

Ruffmuff's picture

The pricks know we are headed into the gutter. This hellcare cost is a huge peg in bringing the system to the knees of the elite.  

Fuck you amerika, this global thingy is going as planned and tuff shit to you.

insanelysane's picture

I have a sister in law on assistance.  She struggles to pay her $50/month electric bill but is able to smoke cigs at $10/pack frequently.

HelluvaEngineer's picture

While this is a silly game played by the state, I do have to say that if you're on assistance you have plenty of time to walk to the ATM every day and get your $25.  It's not like you're doing anything productive, or more likely you are hiding your income and taking the extra money.

bbq on whitehouse lawn's picture

So how far is that ATM from you? Do you have a car? Do you use a cane to walk, or are you in perfect health?
That ATM accross from your gate community what are the rents like there more or less then 20 dollars a day?
Quick you are to throw stones. I hope you are judged much kinder then you are so willing to judge others.

Sophist Economicus's picture

***Sniff**, this had me in tears, very well put, not anything like the typical nostrums thrown out about the disadvantaged ***Sniff***

FreeMoney's picture
  • "Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition."
    -- Thomas Jefferson
  • "I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer."
    -- Benjamin Franklin
  • "Charity is no part of the legislative duty of the government."
    -- James Madison
rwe2late's picture

 Of course, to the self-righteous, NONE of those receiving assistance are elderly or disabled.

 

Instead, consider the banksters ATM fee scam in California.

"Although residents have the right to request that funds be given to them through direct deposit into a bank account, very few do: more than 96 percent of Californians use cards. [Maybe because they don't qualify for free checking accounts?]
They are allowed four withdrawals per month, after which they have to pay 80 cents for each withdrawal.
On top of that, many banks and ATM owners charge a fee, usually about $2 to $3 per transaction. Check cashing stores also charge a fee of about 1 to 2 percent of the withdrawal. Nearly a third of ATM transactions were at five banks that all charge for EBT use, and they got more than $9 million in welfare funds through those fees last year."

http://thinkprogress.org/economy/2014/03/26/3419213/california-welfare-f...

Sophist Economicus's picture

I have a sister-in-law on assistance.   Now she makes over $5,000 a month, sitting at home while still on assistance.    If you'd like to find out how you too can be on assistance and make $5,000 a month or more, please visit www.iloveassistance.com    It will change your life!

10mm's picture

Tell your fuckinsister to rol her own.

quasimodo's picture

Or to roll over on her back. Like the song from Hell on High Heels says, "it's a sunny day now baby, every night on her back that's spent"

shovelhead's picture

Housing, clothes, food, furniture and now they're crying because they want to limit the Schlitz Malt liquor allowance?

10mm's picture

Tell your fuckin sister to roll her own.

onewayticket2's picture

Kansas should lay out the Welcome Mat for Connecticut residents....

 

Dr. Engali's picture

Is there a bill in place limiting how corporations can spend their welfare checks? No?..... I didn't think so. 

NoDebt's picture

All of this side-show horseshit and the ACTUAL lead of the article is buried all the way in the skinny paragraph at the bottom.

It's not the welfare restrictions, it's not the tax cuts.  It's the FUCKING PENSIONS.  It's ALWAYS THE FUCKING PENSIONS.

 

Sages wife's picture

Exactly NoDebt. Which is why one of only four Canadians attending Bilderberg is Heather Munroe-Blum, "Chairperson" of the Canadian Pension Plan Investment Board. Hmmmm....

JRobby's picture

sell the crack over the counter at a store that can take EBT? What problem?

Normalcy Bias's picture

Being on public assistance is SUPPOSED TO SUCK. I thought the idea was to help people who are having difficulty supporting themselves, but to make it shitty enough that anyone who can improve their situation does so. The people who have no chance at improving their lot have SSDI and a host of other sources of help.

LoadedBakedPotato's picture

Thats cruel. Don't you know that the safety net is supposed to be a hammock?

oddjob's picture

If being on public assistance is SUPPOSED TO SUCK, how come so many people want a government paycheck/pension/benefits?

Normalcy Bias's picture

Because it's EASY MONEY...

oddjob's picture

...but it's  not goverment assistance?...or is it just OK because its a larger amount?...or is that your normalcy bias?...or all of them?