Winter doesn’t have to be so cold
With rising fuel prices and new cuts in energy assistance, many seniors and low-income residents of the state will be paying more to keep their homes warm in the months ahead.
For years the federally funded Low-Income Heating Energy Assistance Program and the state funded Low Income and Energy Efficiency Fund have helped Michiganders living below 60 percent to 75 percent of the state’s median income—about $3,600 a month for a family of four—pay their utilities. Energy assistance from these funds benefited more than 600,000 households in Michigan in 2010. But this fall, there have been drastic cuts in both LIHEAP and LIEEF, and there are more cuts to come. Michigan already suffers from poverty and unemployment rates well above the national average, and cuts like these will affect residents already struggling in these difficult times.
Last year, LIHEAP and LIEEF paid out over $284 million to help seniors and low-income residents of the state with their utility bills. But LIHEAP funds have already been cut 10 percent in 2011, and the president’s 2012 budget calls for an additional 44 percent cut to the fund. This is intended to bring LIHEAP funding back to 2008 levels, but in real terms, after adjusting for inflation and rising fuel costs, a cut of this magnitude turns the clock back much further.
To add insult to injury, a state appeals court struck down the financing structure for LIEEF in July 2011. Through grants local agencies such as the Salvation Army and the Michigan Heat and Warmth Fund, LIEEF has historically helped those in need keep the heat on through the winter. But already, many LIEEF grantees like THAW have come up short on cash, and soon they will be unable to meet the demand for assistance.
Even though the fund still exists and energy companies continue to pay into it, the court ruled that the Michigan Public Service Commission no longer had the authority to utilize these funds. State Rep. Ellen Lipton, D-Huntington Woods, introduced HB 5008 in late September, which would enable the MPSC to once more make use of LIEEF funds. The Michigan League for Human Services testified in support of the bill at a hearing today. Unfortunately, no vote was taken on the legislation, which would provide a long-term solution to LIEFF funding.
Winter is at our doorstep, and the LIEEF financing structure already lapsed on Oct. 1. Lawmakers have yet to introduce any short-term solutions, such as fixes proposed by the Coalition to Keep Michigan Warm, which might help tide families over as the nights turn cold.
It is true that there are state laws that make it more difficult for utility companies to shut off heat for customers enrolled in state assistance programs from Nov. 1 to March 30 of each year. But, it is a myth that this protection is absolute. The energy company can turn off your heat if you don’t pay your bill or default on your agreement. If a customer’s heat is shut off before Nov. 1, utility companies are under no obligation to turn the heat back on for the winter, and even if their heat is not turned off, there are no measures to protect customers from being hit with a large bill and the threat of shut off on April 1.
Certainly, energy assistance helps protect Michigan’s most vulnerable—almost all households receiving LIHEAP or LIEEF funds include someone over 60, a member with a disability, or a child under 6. But, this isn’t just about doing what’s right; it’s also fiscally responsible. Many families who live above the poverty line but below 60 percent of median income in Michigan rely on subsidies like the Home Heating Credit to keep them out of poverty. This is especially true for families struggling with short-term joblessness. Families in this income bracket tend to spend about 16 percent of their monthly expenditures on utilities compared to the national average of about 7 percent.
Helping these families stay out of poverty doesn’t just save the state the cost of having to add them to its welfare rolls; it also promotes spending. Moody’s Analytics, one of the country’s leading economic research firms, reports that from 2009-2010 every $1 spent on LIHEAP generated $1.13 in economic activity, helping lift America out of the Great Recession. Energy assistance is an important component of Michigan’s economic recovery, and the state needs LIHEAP and LIEEF to help Michigan families get back on their feet.
Cutting these funds now makes life harder for hundreds of thousands of families.
– Taylor Long
