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$69M in state welfare spent in Vegas, Hawaii

October 4, 2010 12:00:00 AM PDT
Are millions of taxpayer dollars meant to help needy families in California being gambled away instead in Las Vegas?A new analysis finds $69 million of the money the state gave out to people on welfare in just the last three years alone was spent in places like Las Vegas casinos, Hawaiian hotel resorts and Miami cruise ships. There's a new push in Sacramento to make such spending of welfare money illegal.

Welfare supporters say it's a political ploy. California already has one of the lowest fraud rates in the country.

Welfare offices in California have been jam-packed during this recession with applicants needing cash assistance for basic needs like food and shelter.

Under new legislation about to be introduced by state Assemblyman Ted Gaines (R-Roseville), welfare recipients may have to start spending their benefits only within the state.

A Los Angeles Times analysis found $69 million was spent outside state lines during a three-and-a-half year period, beginning in January 2007, at tourist destinations like Las Vegas, Hawaii and Florida.

Critics call that "taxpayer-funded vacations" at a time when taxpayers can't afford one themselves.

"These are for folks that are hurting ... that are out of job, and you see that is money is spent on a cruise, then obviously, it's fraudulent," said Gaines.

Benefits are deposited electronically onto welfare cards that are used like a debit card in stores or to withdraw cash at certain ATMs.

The Times analysis found:

  • nearly $12 million spent in Las Vegas
  • $1.5 million spentin in Florida
  • $400,000 spent in Hawaii
  • $16,000 withdrawn from ATMs on cruise ships

But welfare supporters point out $69 million is less than 1 percent of the $11 billion the state gave out during that period.

"When people go on assistance, they're going to have the same kind of life situations come up as anyone else," said Mike Herald, spokesman for the Western Center on Law and Poverty. "You're going to visit your sick relative. You're going to go to funerals out of state. That's what's going on here."

The state says accounts aren't normally flagged until out-of-state transactions continue for more than 30 days because recipients aren't supposed to be gone that long.

"The vast majority of our families who are receiving benefits do so in a legal, lawful manner," said John Wagner, director of the California Dept. of Social Services. "If someone is withdrawing benefits to feed their kid while they're taking care of an aging grandparent, that's allowed."

Taxpayer groups say it's time to move to a voucher system.

"Giving welfare recipients cash is always risk-inherent," said Jon Coupal, president of the Howard Jarvis Taxpayers Assoc.


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