With federal budget cuts, the sky may really be falling

My son loves books, and one of our favorite things to do every night is read before bed. Many of the stories we choose also provide a learning experience. One of our recent favorites has been Chicken Little, which I think my son chooses to laugh at me stumbling over tongue-twisting character names. It also gives us a chance to talk about thinking rationally.
This lesson is applicable from our kids to my policy work to the highest levels of government. But when President Donald Trump released his “skinny budget” in March—despite being light on detail—the potential impact it could have on our state budget and Michigan residents was stifling. And at times, I really do feel like the sky is falling.
My fear is not unfounded. Michigan has grown increasingly reliant on federal funds. Over the past decade, while our total state budget has grown by about 29%, federal funds in our budget have grown by nearly 69%. In our current budget, federal funds provide $22.7 billion of our $54.2 billion state budget. This means that more than $4 out of every $10 provided for important programs like public education, healthcare for children and families with low wages, food assistance and road maintenance are paid for by federal dollars.

These federal grants do matter to our state budget. According to a recent report from the Center on Budget and Policy Priorities, federal grants to states and local governments make up nearly one-third of non-defense discretionary spending. Michigan receives 3% of total federal grants to states, and only California, New York, Texas, Florida, Georgia, Illinois, Pennsylvania and Ohio get a bigger share than Michigan. Cuts to these discretionary programs, which are already at historically low levels, would harm workers, college students, local communities and families with low- and moderate-incomes.
What’s more is that this “skinny budget” proposes to completely eliminate funding for the Low Income Home Energy Assistance Program (LIHEAP), which helps families and many seniors pay heating bills; a block grant that supports housing, community facilities and economic development; the HOME program which helps develop and repair affordable rental housing and repair homes for homeowners with low incomes; and the Community Services Block Grant, which provides anti-poverty services.
While President Trump’s budget only outlines changes in discretionary spending, changes to mandatory grants may still be forthcoming, for example block granting or putting a per capita cap on Medicaid. (While the first round of the American Health Care Act was withdrawn, you can bet that Congress will try, and try again, to repeal the Affordable Care Act and alter Medicaid funding.) Changes in these programs, including Medicaid, the Children’s Health Insurance Program (CHIP), free and reduced-priced school meals, child care assistance and other assistance for families with low incomes, would mean deep cuts to these programs as states would be unable to absorb the costs themselves. This would reduce services to those Michigan residents who really need it.
Cuts to federal grants to state and local governments, and changes in federal programs, will only mean cuts to the very Michigan residents that rely on these services. Changes will result in more potholes and unsafe bridges, fewer Michigan residents with healthcare coverage, more children going hungry, less affordable housing, more poverty and more problems, all having a long-term negative impact on our economy.
So pardon my doomsday sentiment, but states really rely on federal funds to run. And these changes would affect our state for years to come. But we can change the future. It is important for all of us to get in touch with our members of Congress and tell them the things that really matter to us as they make decisions on the federal budget that will have a direct impact on our great state.

— Rachel Richards