Bill to reduce income and property taxes, change mental health funding passes Senate

The Senate passed a wide-ranging bill Tuesday evening that would change how the state funds mental health services, accelerate tax cuts and reduce tax breaks for preserved forest land.

“People need property tax relief. People also come forward, year after year, and say we need a better way to fund mental health,” Sen. Dan Dawson, R-Council Bluffs, said. “We do that in this bill right here.”

Dawson, who led debate on the bill, said that Senate File 587 was “the first substantive piece of legislation” he had seen in either chamber addressing mental health funding and property tax relief. The bill would:

• Fund mental health services through state appropriations, rather than county property taxes;
• Eliminate budget triggers from the 2018 income tax cut bill, setting the changes to go into effect on Jan. 1, 2023;
• Add restrictions for forest reserve property tax exemptions;
• Expands tax credits for elderly and disabled homeowners;
• Gradually eliminates a property tax levy for public school recreation programs;
• Eliminates the property tax “backfill.” Lawmakers in 2013 cut commercial property taxes, but made up the difference through state funds. That program will be gone by 2023 under the bill. 

Republican lawmakers have said the mental health funding changes would lead to more money in the system. Dawson said a state-funded system would also eliminate disparities between different areas.

“No matter where you are in Iowa, you will receive the same quality mental health funding (and care) as any other place in the state,” he said.

Democrats responded that it was unwise to fund mental health services through the state, as lawmakers in future sessions may decide to significantly cut funding to the programs. Sen. Joe Bolkcom, D-Iowa City, said that the current funding systems allowed for targeted, local initiatives.

“Local funding and our county supervisors are the glue that have held this system together and make it work,” Bolkcom said. He called the funding change a “risky shell game.”

Sen. Roby Smith fired back that Bolkcom and other Democrats had peddled “doom and gloom” over previous tax changes. He pointed to Bolkcom’s 2018 comments, quoted in the Quad-City Times, that the tax cuts would lead to a “very big bomb that’s going to go off in three or four years when this is phased in” and lead to significant cuts in state spending.

“We can look ahead to three years from these quotes, and we know they were sensationalized. We know they were inaccurate,” Smith, R-Davenport, said. “The truth is, we’ve increased spending.”

The Senate ultimately voted along party lines, 30-17, to pass the bill, moving it to the House for consideration.