$300 million for nursing homes part of larger deal for MN capital investment

A large Capitol building is seen through budding trees
The Minnesota State Capitol building is pictured on Monday, May 8, 2023.
Ben Hovland | MPR News

Updated at 2:27 p.m.

Minnesota lawmakers have struck a deal to provide $300 million over four years in emergency funding for nursing homes as leverage to bring up a $2.6 billion capital investment package.

The plan would pay for construction projects around the state with a mixture of bonding and cash, and more projects in Republican districts would be included than Democrats had proposed in a cash-only bill. 

The deal also includes a pledge to bring the legislative session to an orderly finish by Monday night. 

“I think that it's great that we reached an agreement. Reasonable time frames for the rest of the bills will be really important for us to finish on time with great results for Minnesotans,” House Speaker Melissa Hortman, DFL-Brooklyn Park, said Saturday afternoon. “I'm a little frustrated that it took us until 1:40 in the morning last night to get this deal. But better late than never.”

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Three-fifths of lawmakers in each chamber need to agree to let the state sell bonds – or take on debt. 

Up until now Republicans in the Senate have been unwilling to agree to that without more tax cuts. And DFLers said in response they’d move forward with a $1.3 billion cash-only bill that focused more on projects in DFL-led districts. Democrats wouldn’t need Republican votes to pass that proposal.

Republicans have also been saying for weeks that DFL budget plans shortchanged nursing homes that have still not recovered from the stresses of the COVID-19 pandemic.

But on Saturday, the terms of the deal were included in a memo signed by leaders of all four legislative caucuses. 

The nursing home money would be split between the next two state budget cycles but would not be a permanent part of state spending. 

Republican leaders said they had hoped to convince Democrats to use more of the budget surplus for tax rebates, but ultimately they felt they had to send more to help nursing homes when DFL leaders said they didn’t want to tie the bonding bill to a tax bill. While they viewed the agreement as a small win, they took issue with many other DFL priorities moving through the Capitol.

“I'm glad that we came to an agreement and we're able to get things for Minnesotans,” Senate Minority Leader Mark Johnson, R- East Gull Lake, said, “but it really seems to be if you're a bureaucracy, government, or a nonprofit in the state, you're doing really well. But Minnesotans really took the back seat in this session.”

Long term care facilities have been sounding the alarm this year after the pandemic, rising inflation and workforce shortages have left them short staffed and financially struggling. Many nursing homes have had to reduce the number of patients they care for due to short staffing, and that has meant people have been turned away while the facilities continue to face budget shortages.

Without a quick and significant cash infusion, dozens of nursing homes stand at risk of closing their doors, long term care providers have said. And that could hurt residents and rural communities as those displaced may have to board in hospitals or move to nursing homes far away from their family and friends, providers said.

Both the House and Senate on Friday approved $100 million in zero-interest loans for nursing homes facing financial hardship, along with additional funding and recruitment money. Long term care providers said the option wouldn’t help many dig out of their budget holes.

And Republicans urged DFL leadership and the governor to press for more money for the human services budget.

“We have to find the money somewhere. I know it's there, there's still some money left on the bottom, they just have to come together with their new targets and say, ‘Look, we’ve got to make this a priority,’” Rep. Dave Baker, R-Willmar, said earlier this week. “Let's do this. And then let's come back next year to fix out the value-based system so that we can actually do this long term without having these last minute problems at the very end of session.”

House Human Services Committee Chair Mohamud Noor, DFL-Minneapolis, said new investments in recruitment for caregivers and nursing home formula increases, as well as $100 in zero-interest loans could help nursing homes weather the tough economic times. And he said the state would likely have to come back and reevaluate their reimbursement rates in the future.

“The key point here is that this is a bridge program, it’s not meant to solve the entire problem,” Noor said. “This is making sure that we take care of those who are in need right now as we did during the pandemic and other circumstances.”

Labor unions, long term care groups and local governments applauded the deal on Saturday and said it would help keep nursing homes open while also ensuring that overdue road, bridge and wastewater projects around the state can get done.

“I’m very proud of our leaders from both parties - they came together in difficult circumstances and put their districts and Minnesota jobs first,” said Jason George, business manager of International Union of Operating Engineers Local 49. “In Minnesota we can still find common ground. This is truly a great compromise that will move our state forward.”

In a letter this week the union called on Senate Republicans to reach a deal that would yield a larger capital investment bill for the state.

The leaders said that the final bonding bill, along with the language to clarify which nursing homes in crisis would be eligible for one-time aid funds, were still being finalized.

Hortman told reporters that all the projects included in House File 669 and House File 670, bonding and cash bills that passed the House but not the Senate early in the session, would be included in a final bill.