California won't be sending its state prisoners to fill the maximum security prison in Standish, Michigan Gov. Jennifer Granholm said today.Granholm said she was notified by California officials Monday night that they would not agree to pay Michigan to house its inmates because of that state's budget constraints.

In a letter sent to Michigan corrections director Patricia Caruso, the California prison chief, Michael Cate, said that what Michigan was asking for inmates at the Standish prison was too expensive and the site lacked security that California wants

"I was very disappointed; the discussions we had were very constructive," Granholm said at a news conference where she announced more commercial development tax breaks around the state. "I believe we will find another use for that facility, and keep those jobs in the area."

While Granholm had negotiated with California for its prisoners as a way to keep open the Standish facility - which she has ordered closed as a cost-cutting measure - the federal government has eyed the prison as a possible detention center for Guantanamo Bay prisoners captured in Iraq or Afghanistan.

Granholm said while that remains a possibility, President Obama would not force it on any state that objects. Granholm said she has reservations about housing terror suspects because of the security risk it would pose.

She said she continues discussions with the state of Pennsylvania to take some of its prisoners, and the federal government to house federal prison inmates.