What is the impact of the Paul Ryan cuts on Michigan?

Aug. 8, 2012
Contact: Judy Putnam at (517) 487-5436

Reducing Federal Deficits Without a Significant Revenue Increase Would Cost Michigan Billions

Ryan Budget Cuts Would Be Three Times Bigger Than Automatic Cuts Scheduled for January

LANSING, Mich. – If significant new revenue isn’t included, efforts to reduce federal deficits would almost certainly damage Michigan’s economic recovery and future economic growth by drastically cutting federal investments in schools, roads and bridges, safe communities and disaster relief.

The House-passed budget from Congressman Paul Ryan is an example of the kind of approach Congress would take if it rejects deficit reduction that includes revenues.

Under Ryan’s plan, Michigan would lose an estimated 22% or $834 million in federal funding for education, clean water, law enforcement, and other state and local services in 2014 alone, according to a report released today by the Center on Budget and Policy Priorities, a nonpartisan policy research organization based in Washington, D.C.

Ryan’s plan also would shift other very large costs to states by reducing sharply federal funding for Medicaid (in addition to repealing the health reform law), and likely by cutting deeply funding for highway construction and other transportation projects.

“Michigan’s economic future is at stake,’’ said Gilda Z. Jacobs, president & CEO of the Michigan League for Human Services. “We need Congress to take a balanced approach that includes revenues as well as spending cuts. For a strong future we need to educate our children, build roads and bridges and have clean water and safe communities.’’

Federal funding for states, counties, and cities very likely would be decimated by an unbalanced approach to deficit reduction in the next decade. That’s because there’s broad bipartisan agreement that significant deficit reduction is needed, but federal policy makers also agree in broad terms that deficit-reduction savings from other major parts of the budget – defense, Medicare and Social Security – should be limited during that period. Federal funding for states and local areas would thus be one of the few remaining sources of large potential savings.

These cuts likely would bring federal aid to state and local governments to historic lows. By 2021, under the Ryan budget, federal grant programs for states, counties, and cities likely would be less than half the average of the last 35 years.

These cuts would add to deep cuts Congress already made to state and local aid last year and deep cuts that Michigan made as a result of the recession to education and other services vital to economic growth. Michigan has cut $470 per pupil for K-12 education over the last two years. The Legislature reduced support to public universities by 15 percent and community colleges by 4 percent this year alone. Adult education has been cut by more than 70 percent over the decade. Revenue Sharing that pays for local public safety and other services has been slashed by $4 billion since 2001, and there are 3,500 fewer public safety officers as a result.

The funding cuts to states, counties, and cities under the Ryan budget proposal would far exceed the automatic cuts scheduled to begin in January, often referred to by the term sequestration. In 2014, the Ryan budget cuts would be three times as deep, inflicting far more damage than sequestration. In later years, as the sequestration cuts diminish but the Ryan cuts remain as deep, the difference would be even larger.

Specifically, the Ryan budget proposal likely would reduce federal funding in these areas in Michigan:

*Education. Head Start, teacher quality programs, special education, and schools in high-poverty areas likely would face deep cuts.
*Transportation. Likely cuts would hurt Michigan’s ability to build and repair roads, bridges, airports, and public transportation systems.
*Public safety. Michigan would likely have less funding for disaster assistance and grants programs that help local police departments hire, train, and equip officers.
*Community development. Funds that help improve water and sewer systems and revitalize deteriorating neighborhoods likely would face cuts.
*Housing. Michigan likely would be less able to provide rental assistance and heating and cooling assistance for low-income people, many of them elderly.
*Workforce.  Michigan would have fewer resources for workforce training and placement services and childcare assistance for low-income working parents.
*Health. Funding cuts would hinder Michigan’s ability to keep community health centers open, provide mental health and substance abuse services, and give nutrition support to low-income mothers and young children.

“It’s imperative that Congress enact a balanced deficit-reduction package that includes new revenue and replaces the automatic budget cuts scheduled for January,” Jacobs said.  “Any efforts to deepen cuts in federal aid to states would undermine our state’s economic future at a time when Michigan’s economy remains fragile.”

The Center’s full report can be found at: http://www.cbpp.org/cms/index.cfm?fa=view&id=3816

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The Michigan League for Human Services is a statewide, nonprofit, nonpartisan policy and advocacy group dedicated to achieving economic security for all in Michigan. It is celebrating 100 years of research and advocacy in 2012. The League’s new name as of Oct. 10: Michigan League for Public Policy.