State high court upholds budget cuts

JEFFERSON CITY, Mo. -- The Missouri Supreme Court on Monday upheld nearly $21 million in cuts to nursing homes, rejecting claims that Gov. Bob Holden had exceeded his constitutional powers.

The state constitution allows governors to withhold appropriated money when revenue fall below the projections used to craft the state budget.

The unanimous Supreme Court decision essentially affirms what has been the practice of Missouri governors for years.

Holden was meeting with officials at an Italian aerospace research center on Monday and was due back in Missouri today. His spokeswoman praised the Supreme Court decision.

"The governor has had to make very hard choices," said Holden spokeswoman Mary Still. "He's cut close to $900 million from the budget and almost 1,000 state jobs, and this confirms his right to make those choices in order to have a balanced budget."

In May, Holden withheld $20.8 million in special nursing home grants while also announcing cuts to state colleges, universities and other agencies.

A lawsuit by nursing homes contended that revenue for their particular accounting fund had not fallen short, so their spending should not have been cut.

'Undoubtedly causes pain'

But the Supreme Court concluded the nursing home grants were part of the state's general revenue, which had fallen short, thus triggering the constitutional provision for Holden to make budget cuts.

"Reduction of these payments to nursing homes undoubtedly causes pain to their owners and operators and might ultimately affect the quality of care for some of the state's most vulnerable citizens," Judge Michael Wolff wrote. "But when the state's revenues are less than expected, the constitution broadly empowers the governor to determine how the pain of revenue shortfalls is to be distributed."

Wolff, who sharply questioned nursing home attorneys during court arguments two weeks ago, is familiar with the state's budgeting process because he served as a legal counsel to former Democratic Gov. Mel Carnahan from 1993 through 1998.

The decision by the state's highest court upholds a September ruling by a Cole County circuit judge.

A spokesman for the nursing home industry expressed disappointment and said the budget cuts -- made final by the Supreme Court decision -- could affect the quality of life for nursing home residents.

Nursing home administrators may have to eliminate outings to ball games or employee positions for social workers, said Earl Carlson, executive director of the Missouri Health Care Association, which brought the lawsuit as the representative for nursing homes and long-term care facilities.

"What we will see is a reduction in the amount of social support we're able to give patients in nursing homes," Carlson said. But "people will not be kicked out of nursing homes."

The $20.8 million cut came out of a $133 million appropriation for grants to improve quality and efficiency in nursing home during the state fiscal year that ended June 30.

The money had been appropriated as a mix of federal Medicaid funds and intergovernmental transfers, or IGT funds -- a category of state money originally obtained from the federal government through an accounting gimmick that is being phased out.

Under the fiscal 2003 budget, nursing homes are due $11.6 million in similar grants to improve quality and efficiency. Nursing homes are unlikely to get any such money in the 2004 fiscal year, because the federal government has halted the funding gimmick.

The nursing home grants made up a small amount of the total money going to nursing homes. For example, Missouri nursing homes are budgeted to receive $693.4 million in federal and state Medicaid funds during the current fiscal year.