DETROIT LAKES - Nursing homes and a flush health care account are at the center of a legislative debate over health care spending as Gov. Tim Pawlenty and lawmakers look for ways to solve a projected state budget deficit.

As part of his plan to erase an estimated $935 million deficit, Pawlenty proposed cutting $187 million from health and human services spending and using another $250 million from the so-called Health Care Access Fund to shore up the state’s coffers.

Long-term care advocates and some lawmakers seized on a provision affecting nursing home funding in Pawlenty’s plan. A funding shift means nursing homes and other long-term care facilities stand to lose nearly $32 million in state funding this year, which would force them to also will miss out on federal matching funds, said Patti Cullen, president of Care Providers of Minnesota.

That would come at a time when one of four Minnesota long-term care facilities faces either operating deficits or the threat of closure, supporters said.

“Nursing homes and senior care facilities are already struggling and as a result, the quality of care provided to our seniors, we believe, is in jeopardy,” Cullen said.

Long-term care advocates contend a 1 percent increase in funding to their facilities would cost less than Pawlenty’s plan to slightly cut the state sales tax.

Jon Riewer, president and chief executive of Moorhead-based Eventide senior living, said his organization, like other long-term care providers, may face a sixth year of state aid increases at a rate less than the rate of inflation.

Riewer said Eventide has diversified in recent years, softening the impact of minimal state aid increases, but he wondered how staff reductions at nursing homes around the state may affect care.

“At some point that is a ticking time bomb,” he said.

Pawlenty said his budget proposal would result in cuts to various health and human services programs, which saw double-digit spending increases in the two-year budget. But the GOP governor said his plan also allows people enrolled in state-subsidized health programs such as MinnesotaCare to remain on the rolls – an important issue to legislative Democrats.

“Nobody will be removed,” Pawlenty said. “It’s just that people who might have been eligible as an expansion of the program in the future will not be.”

Sen. Linda Berglin, the Senate’s health care finance chairwoman, declined to discuss budget details prior to committee discussion in the coming days. However, the Minneapolis DFLer said she will not support shifting the dedicated funds as Pawlenty proposes.

“I believe it’s possible to balance the budget without having cuts to eligibility or using the Health Care Access Fund,” Berglin said.

The fund needs to be protected, Berglin said. She charged that Pawlenty uses it as “a slush fund” to balance the budget.

As the House and Senate begin preparing alternative budget-fixing plans, both Republican and Democratic lawmakers have said programs will need to be cut, but many say nursing homes should be excluded from those cuts.

Sen. Yvonne Prettner Solon, DFL-Duluth, proposes increasing aid to long-term care facilities this year.

“We cannot back away from supporting these essential services,” Prettner Solon said.

Rep. Matt Dean of Dellwood, a key House Republican on health care, said long-term care facilities should be “held harmless” in a budget-balancing package.

“We’ve heard back that the (state aid increase) needs to happen for the nursing home folks,” he said.

House Republicans have proposed taking $20 million to $30 million out of the Health Care Access Fund – typically used to fund health insurance for low-income Minnesotans – to provide nursing home employees a cost of living raise. Berglin does not like that idea because nursing homes do not pay into the fund.

The current two-year state budget, which lawmakers passed a year ago, rose from $31 billion to $34 billion, but with little help for nursing homes, Rep. Marty Seifert, R-Marshall, said.

The health fund should grow, producing a nearly $400 million surplus by next year. Seifert said he thinks the proposal has a chance to pass, given the fact that some Democrats want to increase nursing home wages without raising taxes.

House Democrats will put together their health care budget package in coming days. DFL Rep. Tom Huntley of Duluth, the health care finance chairman, said he has been told by leadership how much his committee must cut from state programs, and will unveil his proposal Monday.

Huntley warned colleagues: “There will be cuts.”

Overall, Dean said, Pawlenty’s budget plan for health care program cuts is “fiscally moderate and prudent given where we are.” He stressed that is does not kick people out of subsidized insurance programs.

Still, public health groups have criticized some of Pawlenty’s budget cuts as being shortsighted. They highlighted a reduction in tobacco prevention grants as well as anticipated cuts to the state Health Department that could affect a cancer surveillance program.

“Don’t reject programs that work,” David Arons of the American Cancer Society told senators.

Seifert, the House minority leader, said the GOP nursing home funding solution does not threaten spending for other issues, such as education.

The Republican leader said even though his caucus supports nursing home increases, he still “largely supports a majority of the governor’s budget.”

“We have our own mind,” he said. “We have our own voice.”

(State Capitol Bureau reporter Don Davis contributed to this story)

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