The operators of a private youth prison near Baldwin sued the state Thursday, claiming wrongful termination of the company's lease.
Inmates at the 480-bed facility about 65 miles north of Grand Rapids already have been transferred to other facilities and nearly 200 employees have been offered other state jobs.
Gov. Jennifer Granholm vetoed money that would have kept the prison open in the budget year that started Oct. 1. The veto saved the state $18 million by ending the state's contract with the GEO Group Inc., the private owners of the Michigan Youth Correctional Facility.
GEO, along with the Village of Baldwin and Webber Township, filed suit in an Ingham County court against the Michigan Department of Corrections and the Michigan Department of Management and Budget.
The company, based in Boca Raton, Fla., said the state can't end the lease because there was no specific prohibition against using appropriated funds to pay the lease in a Department of Corrections budget recently approved by state lawmakers.
But Granholm said the facility costs too much to run and houses few of the violent young offenders it was meant to hold. The state sent economic development workers to Baldwin to help local officials look for other business opportunities for the city and county, one of the state's poorest.