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Federal default could wreak havoc in Wisconsin

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MADISON, Wis. (WSAU) – Failing to raise the federal debt ceiling could have a drastic impact on government services in Wisconsin, including student financial aid, Medicaid, child care funding and workforce training, state officials said today.

Federal revenues make up 29 percent or $9.3 billion of the state budget on an annual basis, according to a memo from administration secretary Mike Huebsch. He said Wisconsin has enough money to cover federal obligations for three months but state officials would likely have to prioritize which programs receive funding.

Perhaps the biggest impact could be on health services. State Medicaid programs receive $350 million in federal support each month and any suspension of payments could force recipients of long-term care services to use nursing homes for assistance. It could also cause providers in rural areas to close, forcing recipients to travel longer distances to receive necessary care.

Some programs, including temporary assistance to needy families, child care, supplemental security income and caretaker supplement benefits, would be affected but there are provisions in the budget to fund them on a short-term basis.

But short-term funding terms are not legally mandated for other services like low income heating assistance, funding for homeless shelters and millions in federal aid to schools. And a loss of federal funding could affect nearly all – or 394 of the 420 state positions – in the department of military affairs.

The state has already received funding for FoodShare and the Women, Infant and Children nutrition program for August and September.

Huebsch also says a government default could affect the state’s bonds and the loss of the nation’s AAA credit rating could affect municipal credit ratings and may lead to a rise in interest rates.

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