Lawmakers nix subsidy to grocers

DES MOINES - State officials were finally successful in eliminating a 7-cent subsidy paid to Iowa grocers each time food-stamp recipients make a purchase.The Iowa Department of Human Services has tried for several years to convince lawmakers to cut it.

Roger Munns, spokesman for DHS, said they confirmed Wednesday that lawmakers had done just that in this year's session, which concluded Sunday.

Munns said officials felt the subsidy to grocers was a waste of taxpayer dollars.

Iowa was one of only six states that paid the subsidy, and at seven cents, it was the highest in the nation.

"It does not produce better service for customers; it doesn't produce better service for us," Munns said.

The subsidy is paid to grocers each time an "electronic benefits transfer" card is used to pay for purchases, much like debit cards are used.

The total subsidy is expected to amount to about $735,000 this year and helped grocers cover transaction costs.

As state lawmakers looked to cut fat out of next year's budget, the money given to grocers ended up on the chopping block.

The subsidy has been in place since the food stamp program switched from using coupons to the electronic cards.

Sen. Amanda Ragan, D-Mason City, said they were looking for ways to cut costs this year that wouldn't affect services to vulnerable Iowans.

"It's the direct services that we were most concerned about," said Ragan, vice chair of a subcommittee overseeing the state's health and human services budget.

Food stamp recipients spend roughly $30 million a month in Iowa grocery stores.

Jerry Fleagle, president of the Iowa Grocery Industry Association, said stores will have to look at their options now that the subsidy is ending in June.

"Our industry considered it very essential," Fleagle said. He noted that some stores pay an 8-cent transaction fee for processing the cards and will now have to absorb the cost themselves.

He said stores could choose to request state-supplied terminals to process the cards, which he said might cost the state more than they save by eliminating the subsidy.

"I think the smaller ones are going to strongly consider it," Fleagle said.