CHICAGO, June 29 (Reuters) - Michigan has to close prisons to save money. California's are bursting at the seams. Both states are struggling with huge budget gaps. Now, Michigan Governor Jennifer Granholm has offered California some of the state's prisons that are slated to close at a yet-to-be-determined cost. In a letter on Monday to California Governor Arnold Schwarzenegger, Granholm formally offered to house California inmates, noting their "mutual interest in resolving budget and corrections problems, perhaps in one fell swoop." "I believe this opportunity has great potential and could be mutually beneficial at a time when states need to rely on each other like never before," Granholm, a Democrat, wrote to her Republican counterpart. A copy of the letter was provided to Reuters. "It would allow California to address some of its immediate needs for additional prison beds and prisoner preparation for release and would permit some of Michigan's very talented correctional and program staff to continue working as they face the likelihood of layoff," she added. Michigan's corrections department announced earlier this month plans to close several prisons this year in order to save $120 million. California faces lawsuits over the poor state of its prison health system, which a panel of federal judges has concluded is largely the result of state prisons filled to twice their capacity. Schwarzenegger last week said California's state government could not afford to spend $2 billion to upgrade prison health facilities while preparing for potentially deep spending cuts to education and state health programs to help fill a $24.3 billion state budget shortfall. Schwarzenegger's office has proposed easing prison overcrowding by transferring inmates who are undocumented immigrants to federal custody. Prison officials in California, which already has more than 7,000 inmates housed in private correctional facilities in Arizona, Tennessee, Mississippi and Oklahoma, are intrigued by Granholm's offer, said Seth Unger, a spokesman for California's prison system. "We are interested in exploring the possibility if Michigan can offer the same level of security at competitive cost," said Unger, adding that a team from California's prison system will travel to Michigan next month to review the offer in greater detail. A spokeswoman for Granholm said talks about prison space began between the two states earlier this month. (Reporting by Karen Pierog, additional reporting by Jim Christie in San Francisco; editing by Carol Bishopric) So is Michigan the Carpathia to California's Titanic? I doubt it, they both will sink together.