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North Carolina is first state to cut welfare amid federal shutdown

By Marti Maguire

RALEIGH, North Carolina (Reuters) - North Carolina has become the first state to cut off welfare benefits to poor residents in the wake of the partial federal government shutdown, ordering a halt to processing November applications until a deal is reached to end the federal standstill.

More than 20,000 people - most of them children - receive monthly benefits aimed at helping them buy food and other basic supplies through North Carolina's welfare program, called Work First, which is fully funded by the federal government. Recipients must reapply each month.

The state's Department of Health and Human Services told its local offices in a letter dated October 10 not to process applications for November benefits until the federal government reaches a deal to restore normal operations.

"We are heavily dependent on federal dollars," said Julie Henry, spokeswoman for the state HHS department. "When these kinds of things happen at the federal level, it has an immediate impact."

Other North Carolina programs funded through the federal Temporary Assistance for Needy Families (TANF) grant also will be affected. That list includes childcare subsidies that cover more than 70,000 children and have already ceased being distributed in some parts of the state.

The federal agency that oversees TANF, the Office of the Administration for Children and Families, urged states to continue funding the program, saying in a letter that the states would be reimbursed unless Congress specifies otherwise.

Critics note that a state "rainy day fund" has $650 million for emergency use and say it's politics, not finances, that drives North Carolina's position on federal programs. The Work First program cost about $4.8 million for September in North Carolina.

"I would say this is an emergency," says Alexandra Sirota, director of the North Carolina Budget and Tax Center, which advocates for low-income citizens. "They're cutting off a lifeline for thousands of North Carolina families who have experienced significant hardships."

Last week, the same state department briefly planned to suspend WIC benefits, which supply baby formula and other staples to poor women with young children. That decision, also unique nationwide, was reversed a day later after the state budget director intervened to provide funds to keep it going.

Workers have been told to continue accepting the applications for November benefits but not to process them until the federal government shutdown ends.

The benefits are applied for and received on a rolling basis. There is no deadline for applying and no single day in which people receive the benefits. That said, anyone who applied for October before this week will receive their benefits.

The state of Arizona said earlier in October it would suspend TANF benefits, but reversed that decision. Governor Jan Brewer ordered that state funds be used to continue the program through October 31.

(Editing by Barbara Goldberg, David Bailey and Cynthia Osterman)

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