With the fate of the governor’s tax proposal still up in the air, Polk County Health Services is unsure whether, or how, it will meet the county’s mental health needs come July 1st.
Depending on what the Iowa Legislature chooses to do, the county could be faced with a $14 million hole in its planned $28 million mental health budget. Because the county has to finalize its overall budget by March 31, there’s a certain urgency to settling the tax-proposal debate, says Polk County Supervisor Matt McCoy.
Gov. Kim Reynolds is proposing an increase in the state sales tax to create a long-term, sustainable funding source for mental health. If approved by state lawmakers, that measure would create about $120 million in statewide funding. McCoy, a Democrat who served in the Iowa Legislature from 1993 to 2019, says Polk County would receive $18 million of the new money, and could collect another $4 million for mental health through tax levies.
“So that would put us at $22 million, but we figure we would need $28 million next year just to stay consistent with where we are now in terms of funding basic, core services,” he said. “Under that scenario, we’d still be short $6 million.”
The situation would be even more dire, McCoy said, if the Republican governor’s plan falls through and doesn’t win the approval of the Iowa Legislature. Members of Reynolds’ own party have questioned some aspects of the plan, so its approval appears far from certain.
“If that doesn’t pass and this whole thing unravels, then I think we’re back to relying on our local property tax levy,” McCoy said. “Well, we only have the ability to levy for about $14 million, but this is a $28 million mental health system we have in the county.”
Complicating matters even further is the county’s current reliance on one-time sources of revenue that might not be there in the coming fiscal year.
Currently, McCoy said, the county is taking advantage of special authorization from the Iowa Legislature to use $6.5 million in cash and mental-health services from Broadlawns Medical Center. As part of that same process, the county was also given permission to move $6.5 million from the county’s general fund into its mental health operating fund.
“We lose that ability next year if we don’t have legislative-intent language from the state saying it’s acceptable for us to continue doing that,” he said. “So, you can see that with all of this, we are going to need to do something drastic and we’re going to need Broadlawns at the table and we’re also going to need the ability to transfer money out of our reserves into our mental health fund so that we can take care of people.”
Polk County is in good financial shape and has been spending millions on new construction and infrastructure by paying cash, rather than borrowing money or issuing bonds. It has the equivalent of 25 percent of its budget held in reserves, and also has a $10 million “rainy day fund” for unexpected expenses. But without the approval of state lawmakers, it can’t shift those resources to mental health services.
“We could potentially move $6 million or $8 million in reserves to mental health, but even then we’d still need that assistance from Broadlawns,” McCoy said.
He said that while Polk County appreciates the governor’s attempt to create a sustainable source of funding for mental health through the proposed sales tax increase, her plan would also reduce the $47.28 per capita mental health levy imposed in each county to no more than $12.50.
Part of the governor’s goal is to ultimately reduce property taxes to improve Iowa’s tax climate, which business interests consider a major obstacle to luring companies to Iowa.
“We don’t want to be capped at $12.50 locally if what we really need is $16 to $18 per capita,” McCoy said. “So my goal is work with the governor’s office and help them understand some of these complexities. I’m personally kind of rooting for the governor to be successful with this 1-cent sales tax, because if we have that reliable, constant source of funding, then I have a much smaller dollar number to fill the gap in the budget. Obviously, it’s easier for us to fill a $6 million gap than to fill a gap of $12 million to $14 million.”