Medicaid could feel the blow of a $60 million cut if the state House's attempts to save the Michigan Merit Award Scholarship succeed.
The Michigan Merit Award program gives $2,500 to students who successfully pass at least four out of the five portions of the Michigan Educational Assessment Program test.
The $60 million cut was the only modification the House made to Gov. Jennifer Granholm's proposed spending plan for the Department of Community Health budget, but the change still faces approval by the Senate and Granholm.
Rep. Michael Murphy, D-Lansing, said leaving such a big hole in the Community Health budget could lead to future problems.
"My question now is, 'Where are we going to get the $60 million to balance the budget?'" he said. "Things like that have gotten us into this budget mess."
If merit scholarships are back on the table, then revenue sharing and fire protection grants should be considered too, Murphy said.
For now, Murphy said he is counting on the Senate's Community Health budget recommendation to maintain the tobacco money's place in health care.
The cut in the health care budget would affect health care services to low-income families and vulnerable citizens. General fund dollars would be used to fill the hole, assuming the same version of the budget is passed in the Senate and approved by Granholm, said Greg Bird, spokesman for the state budget office.
But Bird said he's not sure where that money will come from to fill the new hole that would be left in the general fund budget.
"That hole will be filled, but the question is how it will be filled," Bird said.
Granholm spokeswoman Elizabeth Boyd said health care is more vital to Michigan than merit scholarships.
"They've created a hole in the budget," she said. "The governor stands by using tobacco money for health care."
Granholm supports the Merit Award program but doesn't want to risk health care, Boyd said.
Rep. Shelley Taub, R-Bloomfield Hills, who serves on the House Appropriations Subcommittee on Community Health, said education is her top priority.
"It's up to the Legislature to set priorities, obviously the priority is the merit scholarship," she said.
