The Texas Legislature is faced with a budget challenge that has pitted the Republican majority’s desire to cut government spending against a vulnerable faction: nursing homes. Should the Senate fail to amend House Bill 1, the general appropriations bill for the next biennium, Medicaid reimbursement rates for all providers in Texas would be reduced by 10 percent. Nursing homes would be hit even harder. The industry has crunched the numbers and state officials confirm they could be short the amount they would need to fully cover provider rates by a total of 33 percent, or $1.2 billion. That discrepancy is caused by three major factors: less general revenue, anticipated case load growth and fewer matching dollars from the federal government.