Granholm: Losing federal money could have ‘devastating’ impact on Michigan state budget

Losing federal money could hurt Michigan budget

LANSING, Mich. — Michigan’s budget problems will become significantly worse and state programs will be put at risk if Congress doesn’t revive a federal spending bill, Democratic Gov. Jennifer Granholm said Friday.

The legislation killed by a Republican filibuster on Thursday includes more than $500 million in federal Medicaid money that Granholm and state lawmakers were banking on for their spending plans for the fiscal year starting Oct. 1. The legislation also would have extended federal jobless benefits for unemployed workers. Thousands of laid-off Michigan workers will begin to lose benefits in July, Granholm said.

The governor said failing to revive the bill would have a “devastating” effect in Michigan and other states relying on help from the legislation. Granholm said she was “amazed” by what she called “obstructionism” of U.S. Senate Republicans who blocked passage of the plan.

“They’re not dealing with consequences here on the ground in the states,” Granholm said. “This means jobs to people, it means health care to our citizens and it means food on the table for those who are unemployed.”

Granholm is among the governors who plan to lobby for Congress to revive the measure.

Medicaid covers roughly 1.8 million of Michigan’s nearly 10 million residents. Granholm said one possible budget option would be further reducing reimbursement rates to doctors who treat Medicaid patients. But she worries that would prompt doctors to stop accepting Medicaid patients.

Michigan lawmakers already are debating how to eliminate a projected deficit of roughly $1.5 billion from next fiscal year’s state budget. They may be forced to look at cuts in all aspects of the state budget if they have to trim another $500 million on top of that.

There’s a projected surplus in the state’s school aid fund, but some Democrats don’t want to raid that money to fill holes in the general fund. Democrats have discussed selling off another portion of future tobacco settlement money for cash up front, but many Republicans oppose that idea.

Matt Marsden, a spokesman for Republican Senate Majority Leader Mike Bishop, said the nonpartisan Senate Fiscal Agency is being consulted to look at possible options if the money doesn’t come through.

More than 400,000 unemployed Michigan workers are currently receiving either state or federally funded unemployment benefits. Michigan’s unemployment insurance agency estimates that 87,000 people would exhaust their benefits by July 3 without an extension. That number could double by the end of July.