Nebraska restricts cash welfare spending on tobacco, porn, and luxury goods

Nebraska has moved to restrict how recipients of the Temporary Assistance for Needy Families (TANF) program spend their benefits, barring purchases of tobacco, pornography, tattoos, and luxury items. On Oct. 9, Republican Gov. Jim Pillen directed the state to implement these new spending limitations for cash welfare recipients.

The move targets a long-standing loophole in federal law that has allowed cash welfare funds to be used for goods and services not traditionally associated with basic economic security. While federal rules prohibit spending TANF funds at specific establishments like liquor stores and casinos, recipients can still purchase alcohol at grocery stores or access adult entertainment through other retail channels. This gap has existed since the inception of the TANF program roughly 30 years ago.

The restrictions in Nebraska follow a similar action in Florida. In August, Republican Gov. Ron DeSantis announced that the state would block cash welfare spending on tobacco products, drugs, pornography, tattoos, video games, and other non-essential goods. The Trump administration quickly approved Florida's plan, a move DeSantis said would protect taxpayers from fraud and assist those in genuine need.

Federal guidance from the administration has encouraged states to close these loopholes individually. Because states cannot unilaterally change federal requirements for cash welfare, they must seek approval from the federal government to adopt stricter state-level rules. This process has enabled states like Florida and Nebraska to amend their plans without waiting for congressional action.

Beyond the specific items banned in Nebraska, such as psychic and fortune-telling services and luxury watches, cash welfare has previously funded concert tickets, streaming subscriptions, and spa treatments. The administration's approach relies on states amending their plans or working with state lawmakers to create more permanent reforms and hold retailers accountable for circumventing restrictions.