Iowa Gov. Kim Reynolds wants to use a portion of her proposed 1-cent sales tax increase to help pay for some of the mental health costs now shouldered by the counties.
Reynolds would increase the statewide sales tax from 5 percent to 6 percent — Iowa also allows local governments to impose a 1 percent local-option sales tax – to generate an additional $540 million in annual revenue.
With a portion of that money, the state would pay for some of the mental health expenses presently paid for by the counties through levies that are capped at $47.28 per capita. The governor’s plan calls for that per capita cap to be reduced to $12.50, with the state ultimately paying for 70% of the costs associated with mental health.
“Mental health is becoming one of the biggest challenges of our time,” Reynolds said in her Condition of the State address Tuesday. “We must now provide predictable funding. To date, property taxpayers have supplied most of that support, through their county to the local mental-health regions. I’m proposing, through the Invest in Iowa Act, that we reduce property tax levies and provide the needed funding through the state general fund … By establishing a dedicated and stable fund for mental health, we will give hope to so many who are suffering in silence.”
Peggy Huppert, executive director of the Iowa chapter of the National Alliance on Mental Illness, praised Reynolds for her focus on mental health, but said she remains concerned about the details of the funding plan.
“She has put forward a proposed solution, and I applaud her for that,” Huppert said. “But my understanding is she’s talking about capping the county mental health levy at this really low rate. Right now, it’s capped at $47.28 per person, or per capita, and there are also overall spending caps on mental health levies for each county. We at NAMI had proposed the opposite – that we eliminate all of those limits and let the counties levy whatever they need to levy and then the state could come in and essentially buy down or offset that rate. The governor is going in the opposite direction, and I’m sure that’s because of the concerns of the Farm Bureau and other groups that are leery of any kind of property tax increase.”
Huppert said that while it’s encouraging to see the state play a bigger role in funding mental health, using a sales tax to do it can be problematic, both practically and politically.
“The challenge is that when we have a downturn in the economy, the sales tax revenue goes down,” she said. “Well, that’s exactly when the need for health and human services increases. So it’s generally not a great idea to rely on sales-tax revenue for health and human services. And of course a sales tax is also regressive. So I am sure there are those who will be concerned with cutting the income tax, which is progressive, as a trade for raising the sales tax, which is regressive.”
Senate Minority Leader Janet Petersen, D-Des Moines, said she’s not convinced the Republican governor’s plan to shift more of the cost burden to the state will provide a more stable source of funding for mental health services.
“We have constitutionally protected our roads,” Petersen said, adding that “it would be nice” if Iowa could provide that same level of funding assurance when it comes to mental health services.
Sen. Robb Hogg, D-Cedar Rapids, said that, at best, the governor’s plan will simply change the funding mix for mental health. “At worst,” he said, “you undermine traditional funding sources and you’re put in a situation where next year, or the year after that, the legislature fails to provide inflationary increases — and all of a sudden we’re losing critically needed mental health services.”
In 2017, Mary Neubauer of Clive lost her 18-year-old son to suicide. She has spent the past three years working to improve access to mental health care in Iowa, and said Tuesday the need remains urgent.
She said that while she hadn’t seen the details of the governor’s plan, it was “huge” that Reynolds made mental health funding a major part of her agenda.
“I think if there is a frustration on my part, it’s that these conversations take so long,” she said. “The fact of the matter is, there are people in crisis right now — families and kids in crisis — and help three months from now is no help at all to them because they need help now. And so I would just urge all lawmakers and policymakers involved in this conversation to try to keep this moving forward as quickly as possible because there is a need and folks in crisis can’t wait.”
Huppert said questions over mental health funding need to be settled soon given the fact that counties must certify their budgets for the coming fiscal year by March 31. She said some of the 14 mental health regions funded by the counties are already considering substantial cuts in spending for the next fiscal year.
In fact, the eastern Iowa mental-health region that includes Scott, Clinton, Muscatine, Jackson and Cedar counties recently eliminated $1.2 million dollars in services from its current-year budget to address a growing deficit.
“The mental health regions, historically, have not had waiting lists for services, but that’s the next thing that we could see,” she said.