Governor Rick Snyder says extending Medicaid to more working poor people will save the state a lot of money – maybe $130 million next year. That begs the question of what to do with the budget windfall.
The Snyder administration says the Medicaid expansion to 320,000 working poor people will help reduce uncompensated hospital care and other things that drive up the cost of health care. But the state should also see direct savings by shifting costs like prisoner mental health services to the Medicaid program.
“So that really allows dollars to be freed up for other budgetary uses,” says Snyder.
The state could use some portion of that to add to the state’s “rainy day fund,” which was depleted through the lengthy recession. More money in the bank makes Wall Street happy and could reduce the state’s borrowing costs.
But the governor also has some other ideas in mind. For one thing, he’d like to use at least some of the money for transportation.
“I was supportive of having the concept of roads or transportation on the table because we do need to invest more in roads,” he says, arguing that transportation is already under-funded and fixing that infrastructure grows steadily more expensive.
But even if the entire estimated $130 million in savings were turned over to transportation, that would still be far less than the $1.2 billion the governor says is needed.
Thus far, the Legislature has not warmed up to some of the other ideas for raising money for roads and transportation, such as an increase in the state’s 6 percent sales tax or higher vehicle registration fees.