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States Veto Food Stamp Cuts as $8.6 Billion Deal Fades

Congress last month passed a revamp of agriculture and food policy that was supposed to save the U.S. government $8.6 billion in food-stamp costs over a decade.

That may not happen now that some states are finding a way to avoid the cuts.

New York, Connecticut and Pennsylvania are triggering extra nutrition spending by adding money to a home-heating subsidy tied to increased food-stamp aid. The move feeds needy families while thwarting spending-reduction goals.

Deficit watchers say they’re disappointed, while anti-hunger activists are lobbying other states to do the same. If more follow, the federal government would have to spend much of the $8.6 billion it planned to save, as states reduce spending on other programs to meet the new mandate.

“Some states will be able to do it, some states will not be able to -- no one knows for how long they’ll be able to do it,” Connecticut Democratic Representative Rosa DeLauro said in an interview at the Capitol. “They have jumped into the breach where the federal government abdicated its responsibility.”

Federal spending on food stamps -- formally called the Supplemental Nutrition Assistance Program -- has more than doubled in the past five years, with most of the money spent at retailers including Supervalu Inc. (SVU) and Kroger Co. (KR) The program cost a record $79.9 billion in fiscal 2013, almost one-eighth of the roughly $650 billion a year Americans spend on groceries.

Energy Assistance

Some of that food aid is tied to the Low Income Home Energy Assistance Program, also known by its acronym, LIHEAP.

Under the previous farm law, states that gave residents as little as $1 a year in home-heating assistance -- a move nicknamed “heat-and-eat” -- could qualify that person’s household for an average of $1,080 in additional food stamps annually from the U.S. government.

About 15 states and the District of Columbia did just that, catching the attention of lawmakers who sought savings through the farm bill.

“States were gaming the system,” Kansas Republican Senator Pat Roberts said last month.

The new law raises to $20 a year the home-heating aid needed for a household to get extra food-stamp money. The idea is that most of those 15 states will stop qualifying residents for the food aid and save the U.S. government money.

New York

That’s not happening in New York. The state said it raised home-heating spending by $6 million, triggering an additional $457 million a year in federal food-stamp spending to about 300,000 households.

Lawmakers who supported even deeper cuts to food stamps than those eventually included in the farm law criticize states for using the rules to erode savings.

“We didn’t expect that or we would’ve written it in the language to prohibit it,” said Iowa Republican Steve King, chairman of the House Agriculture subcommittee that oversees food stamps and nutrition aid. The move, while legal, is “perverse, just perverse,” King said in an interview.

Texas Republican Mike Conaway, a senior member of the House Agriculture Committee, said the states’ position was “disappointing” and added, “That’s not going to generate the kind of savings” that were projected.

States pushing to maintain the aid call it necessary.

“These federal cuts have made it harder for our state’s most vulnerable residents to put food on the table. The state has intervened on behalf of these low-income New Yorkers,” Governor Andrew Cuomo, a Democrat, said in a statement Feb 25. “New York is stepping up to help families in need.”

Connecticut’s Governor

Connecticut is spending an extra $1.4 million to preserve federal food-stamp money for about 50,000 households, Democratic Governor Dannel Malloy said the day before Cuomo’s announcement. Pennsylvania said March 5 it will spend $8 million to preserve $300 million in food-stamp funding for up to 400,000 families.

The moves are encouraging in their commitment to helping the hungry, said Ellen Vollinger, a food-stamp lobbyist with the Food Research and Action Center in Washington.

At the same time, it’s frustrating that states may have to divert resources from other necessary programs to counteract congressional budget cuts, she said.

“This was always budget-driven,” Vollinger said in a telephone interview. “Discussions in Washington can be academic, but $90 a month for needy families is a real number. It’s shifting a burden to the states, and it’s doubtful how many of them will be able to do it.”

Lobbying States

Vollinger said anti-hunger activists are lobbying states affected by mandates in the new law to increase their home-heating assistance.

Last week 16 senators and 81 House members wrote to the U.S. Department of Agriculture seeking a delay in the food-stamp cuts. The agency, in a March 5 memo to states, said it can’t put them off.

Meanwhile, budget watchdogs who supported the cuts aren’t pleased either.

“True reform would have included stringent work requirements for food-stamp eligibility,” said Andy Roth, government affairs vice president with Club for Growth, a Washington small-government advocacy group. “Even better, devolve the program back to the states” as block grants, which would end the temptation to exploit quirks in federal law, he said.

About 47 million Americans got food stamps in November, the latest month data were available, the USDA said Feb. 7.

Almost half of all food stamps are redeemed at big-box retail chains such as Wal-Mart Stores Inc. (WMT), while most of the rest are used at supermarkets such as Safeway Inc., (SWY) according to data collected by Bloomberg.

To contact the reporters on this story: Derek Wallbank in Washington at dwallbank@bloomberg.net; Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Laurie Asseo

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