Is the Alabama legislature poised to take cars away SNAP and TANF recipients? According to the Andalusia Star-News, the answer is “yes.” An article discussing Senator Arthur Orr’s bill to tighten eligibility requirements for state public assistance programs includes this sentence:
The bill also would cut out the ability of food stamp recipients to own cars.
That’s quite a mean-spirited requirement for a state with extremely limited public transportation options, and I was already composing a blistering response. Until I actually read the bill.
There is a lot to dislike in Orr’s legislation (SB-285 Substitute Bill), but there is no prohibition for car ownership. The Andalusia reporter used poor wording in her article. (Note: the reporter subsequently updated the wording, but it’s not much better. Now it reads: “The bill also would change asset calculations, which currently allows for people to own cars.” ) Orr’s bill does limit the value of cars that recipients can own – and this is a change.
According to the USDA, Alabama currently excludes the value of all owned vehicles when determining benefit eligibility:
Orr’s bill does change that – but it does not prohibit car ownership. The bill changes Alabama’s asset limits to match Federal limits. Currently, the federal government has income & asset guidelines, but states have a lot of flexibility in how they administer the programs.
In short, federal law gives states have the right to implement policies that make more people eligible for benefits than they would be under federal regulations, but states can’t implement requirements that would make fewer people eligible.
Alabama right now makes more people eligible because we’re one of just a few states (including Colorado, Ohio, and Illinois) with no asset limits for public assistance. If Orr’s bill becomes law, the rules regarding cars would change to match federal limits. We would go from cars not being counted at all to this:
Households may have $2,250 in countable resources, such as a bank account, or $3,250 in countable resources if at least one person is age 60 or older, or is disabled. However, certain resources are NOT counted, such as a home and lot, the resources of people who receive Supplemental Security Income (SSI), the resources of people who receive Temporary Assistance to Needy Families (TANF), and most retirement (pension) plans.
Licensed vehicles are NOT counted if they are:
- used for income-producing purposes,
- annually producing income consistent with their fair market value,
- needed for long distance travel for work (other than daily commute),
- used as the home,
- needed to transport a physically disabled household member,
- needed to carry most of the household’s fuel or water, or
- if the household has little equity in the vehicle (because of money owed on the vehicle, it would bring no more than $1,500 if sold)
For the following licensed vehicles, the fair market value over $4,650 is counted:
- one per adult household member, and
- any other vehicle a household member under 18 drives to work, school, job training, or to look for work
For all other vehicles, the fair market value over $4,650 or the equity value, whichever is more, is counted as a resource.
Now that we have the correct information, we can begin to discuss the advantages & disadvantages of asset limits, from a fact-based perspective.
The Corporation For Enterprise Development (CFED), an anti-poverty organization, opposes strict asset limits for public assistance because they make it more difficult for poor families (the working poor in particular) to lift themselves out of poverty:
Many public benefit programs—such as cash welfare, food assistance and heating assistance—limit eligibility to those with few or no assets. If individuals or families have assets exceeding the state’s limit, they must “spend down” longer-term savings in order to receive what is often short-term public assistance. These asset limits, which were originally created to ensure that public resources did not go to “asset-rich” individuals, are a relic of entitlement policies that in some cases no longer exist. Cash welfare programs, for example, now focus on quickly moving individuals and families to self-sufficiency, rather than allowing them to receive benefits indefinitely. Personal savings and assets are precisely the kinds of resources that allow people to move off public benefit programs. Yet, asset limits can discourage anyone considering or receiving public benefits from saving for the future.
While most programs exclude some “illiquid” assets, such as a home or defined benefit pension, many other liquid holdings, such as defined contribution retirement accounts (e.g., 401(k)s), health savings accounts, education savings accounts (529s and Coverdells) or individual development accounts, often count against the asset limits. States should exempt these types of assets. In addition, vehicles, which are vital for many to find and maintain employment, should be exempted.
President Ronald Reagan’s “welfare queen driving a Cadillac” trope has lingered in the public mind for decades. Interestingly, there actually was one – ONE! – woman who fit that profile. Because of her misdeeds, multiple generations of poor people in the US have suffered.
If Alabama moves to implement policies that require people to liquidate their life savings, retirement accounts, and sell everything of value (often at a huge discount) in order to receive short-term public assistance, those families suffer long-term harm. They can never acquire enough savings to get out of the poverty trap.
For instance, average rent for a 2 BR apartment in Birmingham is $891. How would a family currently in public housing save enough to move out of public housing and into a private apartment if they’re not allowed to have more than $2250 in savings? Moving costs alone would eat up most of that, leaving them with no safety net:
- Security deposit equal to one month’s rent: $891
- First month’s rent in advance: $891 (some landlords also require the last month’s rent)
- Utility deposit (limited to 2x estimated monthly bill): $300
At that point, the family has just $168 left for emergencies.
Too many people assume that anyone receiving public assistance is just too lazy to find work. You know… “welfare queens,” but the reality is that many, many people are just a few lost paychecks away from shopping at their local food pantry.
63% of Americans wouldn’t be able to pay a surprise $500 bill for car repair, medical treatment, etc. Families that look solidly middle class are often teetering on a mountain of debt. At some point in their lives, 80% of Americans struggle with unemployment and poverty or near-poverty.
Some Alabama legislators seem sure it will never happen to them, and I wouldn’t wish ill on anyone, but…. you can’t hope but wish something would change their attitude.