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DAVID GREENE, HOST:

The economy is front and center on the minds of local government leaders around the country. And let's visit one community now. In upstate New York, county officials are scrambling to sell off nursing homes that have been taxpayer-funded for generations. North Country Public Radio's Brian Mann has the story.

BRIAN MANN, BYLINE: I'm standing outside the Horace Nye nursing home in tiny Elizabethtown, New York. Exactly a hundred elderly people live here because that's how many beds there are and there's always a waiting list. The home was established by Essex County in 1832, when this village in the Adirondack Mountains was a frontier mining and logging town. It was a place of last resort for people too old, too infirm and too poor to care for themselves.

But earlier this summer, county supervisors - including Sue Montgomery Corey - voted to sell the home to a private company based in the Bronx.

SUE MONTGOMERY COREY: I think that we are at a point of having to make some really hard choices.

MANN: Horace Nye loses a ton of money. State and Federal agencies have refused to boost Medicaid payments for poor residents, which means Essex County taxpayers have been forced to chip in $2 million a year to keep the place running.

Montgomery Corey says a corporation can operate more efficiently and can pay for things that cash-strapped Essex County just can't afford, like training for staff and new equipment. The company will also hire workers for significantly less than the county paid its employees. But some county leaders say the belt tightening has gone too far.

TOM SCOZZAFAVA: There's some services that government is morally obligated to provide.

MANN: That's Tom Scozzafava, another member of Essex County's Board of Supervisors. Despite the flood of red ink, he voted against the sale.

SCOZZAFAVA: I think services for our elderly population is critical, especially in a county as rural as Essex County.

MANN: This kind of debate is happening all over the U.S. It's not always nursing homes. Nationwide, governments run only about seven percent of senior homes. So in some places, it's cuts to police department or nutrition programs or public transportation. Local officials are asking big questions about what their core mission should be and how they should pay for it in the post-recession world.

Larry Eichel is a researcher with Pew's American Cities Project.

LARRY EICHEL: The economy may be recovering. But in a lot of local governments, their revenues are not recovering or they're recovering very slowly.

MANN: In New York that squeeze got worse last year, when the state legislature passed a new cap on local property taxes. Some local governments here are on the brink of insolvency. At least 10 county-run nursing homes have already been sold, and county officials say they expect another dozen to be privatized in New York in the next couple of years.

But critics say it's unclear what will happen if some these private companies go out of business, or stop taking residents who rely on Medicaid.

Shawna Barber has been a nurse and county employee at Horace Nye for 19 years.

SHAWNA BARBER: Private picks and chooses who they keep and who they take. And what about the rest of our county residents that's going to need us some day? You know, it's scary.

MANN: Especially in rural areas like Essex County, that would mean families forced to care for elderly loved ones at home, Barber says, or driving long distances to find nursing home care in the nearest city.

Centers for Specialty Care, the company that agreed to pay $4 million for Horace Nye, has been buying up government-owned nursing homes across rural New York. The company refused repeated requests from NPR for an interview.

But the day before Horace Nye was sold this summer, another private nursing home nearby announced that it will sharply cut the number of beds available to low income seniors who rely on Medicaid.

For NPR News, I'm Brian Mann in Essex County, New York.

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