State money funds booze, strippers and gambling

ALBUQUERQUE (KRQE) - A giant loophole in the law is allowing your tax dollars to be spent at strip clubs, bars and casinos.

140,000 New Mexicans receive welfare benefits, which are supposed to be used to provide basics essentials like food and housing.  The state makes it easy for these recipients to access their benefits by providing debit cards, known as EBT cards, with money automatically loaded on them.  The amount of money one gets depends on their poverty level.

This money is not supposed to be used on liquor, adult entertainment or gambling but some people have found a way to cheat the system and still get what they want.

"If you go to ask the state to give you money for your kids, your family, and you're going to spend it on drugs and strippers and things like that, I don't think that's right," said Imelda Rivera who receives welfare for herself and her 8-year-old child.

Here's how people are bilking the system. The state allows about 39,000 welfare recipients to withdraw cash from the EBT cards. This process is meant to make it easier for those people to pay a landlord, who won’t accept a check or credit card.  Although some people are using this privilege to withdraw cash from ATMs inside bars, liquor stores, strip clubs and gambling establishments.  They are thought to be turning around and spending that cash inside those businesses.

The Human Services department says people withdrew nearly $44,000 in the last fiscal year at 45 prohibited businesses across the state.

"Taxpayer money should not go towards those types of things," said Matt Kennicott, spokesman for Human Services.

More than $6,600 was withdrawn from the ATM at the Downtown Distillery on Central Avenue in Downtown Albuquerque. That ATM is located outside so the cash could have been spent anywhere. More than $5,000 was taken out at the ATM at Sunland Park Racetrack and Casino. And $1,600 was withdrawn from two strip clubs in Albuquerque.

That program handed out nearly $77 million dollars last year, so a very small percentage went to booze, casinos and strip clubs. But under a new federal law, all states must prevent cash withdraws at bars, liquor stores, gambling establishments and adult entertainment by February 2014 or face federal cuts.

"If we're not in compliance we stand to lose roughly five and a half million dollars," Kennicott said.

The legislature is moving quickly. Republican Representative Nate Gentry introduced a bill this session to block EBT cash withdrawals at the prohibited businesses. It cleared committee and moved to the floor of the House.

"They're misspending the money. So we want to make sure that money for life's necessities not spending money on booze and strip clubs," Gentry said.

Still, this won't completely stop welfare recipients from spending money where they shouldn't. There is no way the state can track cash spending. And there is nothing stopping a person from going down the street to take out money from an ATM then spending it on a prohibited item.

"Yeah they could but this is really about changing behaviors," Kennicott said. "We want to make sure that access isn't nearly as easy as it currently is."

What is not being discussed at a state level? Making it a crime to spend money at a liquor, gambling or adult establishment - as it stands now, it's only frowned upon.