Saint Paul, Minnesota — Minnesota Governor Tim Walz unveiled his 2026 supplemental budget proposal Tuesday, and nursing home operators across the state are already pushing back on one of its most consequential pieces: a new round of oversight rules that would cut nursing home reimbursement rates by roughly $57 million over two years.
The broader package — which cuts $370 million in total state spending — is billed as a responsible course correction heading into the next budget cycle. But for long-term care providers that have spent years absorbing Medicaid underfunding, the nursing home piece lands hard.
What the budget actually does
Under the proposal, the state would impose new oversight rules on nursing home reimbursement as part of a broader push to reduce costs across human services. The $57 million in projected savings would come from tightening reimbursement controls — essentially, the state paying less for some of the care nursing homes currently bill for.
The plan doesn’t gut funding entirely. Minnesota has roughly $3.7 billion sitting in its general fund, and Walz says the proposal is designed to leave a projected $1.8 billion balance for fiscal years 2028 and 2029. But critics argue the cuts are being made in the wrong places.
Republican backlash
Senate Minority Leader Harry Niska was direct in his criticism.
“The governor is proposing even higher taxes while cutting core services like nursing home funding,” Niska said. “It’s time to focus on stopping fraud and making Minnesota more affordable instead of raising taxes.”
Ways and Means Chair Paul Torkelson echoed concerns, noting that cuts to nursing homes will face “strong resistance” in the Legislature. He and two Republican health committee chairs identified Medicaid compliance and IT modernization as potential areas of bipartisan agreement — but the nursing home line item wasn’t on that list.
The bigger picture
The supplemental budget arrives at a difficult moment for Minnesota’s long-term care sector. The state has been wrestling with a structural budget deficit, and the push to rein in human services costs is being felt across the board. Disability services would see more than $120 million cut over two years under the same proposal.
For nursing homes — many of which rely on Medicaid for the majority of their revenue — the combination of tighter oversight and lower reimbursements adds financial pressure that comes on top of already strained Medicaid payment timelines operators are navigating at the federal level.
Minnesota’s Legislature must pass a final budget by June 30 or the state faces a government shutdown. The nursing home provision’s fate will likely be decided in that final stretch.
Industry groups haven’t formally responded yet, but given what’s at stake, that won’t take long.
