by Matt Lacy –
The increase in food stamp recipients under President Obama’s economy is causing an unintended consequence as local municipalities find themselves dealing with the loss of tax revenue resulting from the purchases.
The number of people on food stamps has increased to a record 46.7 million people in June while the number of food stamp spending has doubled during Obama’s term.
However, the increased expenditures are causing budget shortfalls in local economies.
Under the program, all food stamp purchases are tax exempt. These purchases are resulting in a lack of sales tax revenue being collected by cities that would normally be assessed on the purchases. Moreover, the Department of Agriculture, which administers the program, does not reimburse cities for this loss of revenue. Cities frequently use the revenue to fund improvement projects for streets and other repairs.
In 2011, Evans lost $154,731 in sales tax revenue from food stamp usage. Reflecting the rise in food stamp usage, from January to July of 2012 the amount of lost revenue jumped to $121,881 meaning the city is on track to loose over $100,000 more in revenue from the previous year.
Evans Mayor Lyle Achziger notes that exempting the purchases from sales tax places the burden for funding the services the taxes provide on others.
“Because those citizens using food stamps are exempted from paying sales tax on those items purchased with food stamps, they are exempted also from paying their proportionate share for services funded by that sales tax,” Achziger said. “This imposes, in my opinion, an additional burden on those citizens not using food stamps to provide for those services that all of us use.”
While Evans is tracking the figures, the issue appears to have slipped beneath Greeley’s radar screen.
City Manager, Roy Otto, told the Gazette that the city’s tax return form for businesses does not have a specific line available to indicate food stamp sales. He stated that since the city had no control over the program they had not been tracking sales from food stamp usage, however with the increase in people on food stamps the city may need to consider updating their forms to track the data.
The Department of Agriculture has resisted attempts to find out how the money is being spent by recipients.
In June, the Washington Times published an article titled, “Top secret: $80B a year for food stamps, but feds won’t reveal what’s purchased.”
The story noted that the government refuses to provide information on which types of stores are doing the most business in food stamp business and refuses to provide breakdowns on the types of foods being purchased.
“Coinciding with lobbying by convenience stores, the U.S. Department of Agriculture, which administers the program in conjunction with states, contends that disclosing how much each store authorized to accept benefits, known as the Supplemental Nutritional Assistance Program (SNAP), receives in taxpayer funds would amount to revealing trade secrets.”
The paper reported that Maryland refused a Freedom of Information Request for the data, telling them the federal government has instructed states not to release the data.
Critics of the program have cited instances of individuals purchasing candy, steak, lobster and other food items using food stamps.