‘If we don’t do it now … this is never going to happen’: Senators advance mental health tax cut

By: - May 10, 2021 4:07 pm
Iowa Capitol Dome

The dome of the Iowa State Capitol. (Photo by Joe Raedle/Getty Images)

There’s still no agreement between the House and Senate on taxes as both chambers advance mismatched proposals.

The Senate held a meeting Monday about Senate File 1276, the tax “compromise” proposed last week by Gov. Kim Reynolds. The House has not agreed to the proposal.

Sen. Dan Dawson, R-Council Bluffs, said Reynolds’ plan was “the best idea of all three parties in this equation: the Senate, the House and the governor’s office.” The proposal would accelerate tax cuts, phase out the property tax “backfill” and fund the state’s mental health services through a state appropriation. 

Reynolds said last week the proposal would result in a $400 million tax cut for Iowans.

“This is a culmination of all of our priorities,” Dawson said Monday. “This is the pathway forward to conclude the session.” 

Lobbyists spoke Monday in favor of most parts of the 103-page bill. Housing advocacy groups praised increased funding for the Housing Trust Fund and additional workforce housing tax credits. Tax relief lobbyists cheered the acceleration of 2018 income tax cuts, which would begin in 2023 under the proposal, and the phasing out of the inheritance tax.

Sen. Pam Jochum noted that much of the bill matched across chambers, aside from a few key sections.

“The divisions and provisions that are contained in both bills, I support,” Jochum, D-Dubuque, said. “I have no problem with them.”

Several groups praise mental health property tax cut, but critics worry about state funding 

The Senate proposal would fund mental health programs through a state appropriation instead of through property taxes. 

Several mental health and health care groups celebrated the proposed change on Monday. 

“We also appreciate that the state is making good … on its promises to invest in mental health,” said Andy Conlin, lobbyist for Iowa Association of Community Providers. “We think that that is a really positive step forward, and we think that this is going to improve outcomes for Iowans across the state.”

Conlin also praised a telehealth provision that would require insurance companies to reimburse providers at the same rate for virtual visits as in-person appointments. Last week, NAMI Iowa, a mental-health advocacy organization, said the new funding mechanism would create more equity in treatment across the state

But critics of the proposal worry the state cannot be trusted to adequately fund mental health programs in future years. Iowa’s mental health levy represents $100 million worth of property taxes, funds that would now need to come from the state’s pocket.

“I sure hope the promise that these folks are getting from this bill will be there in the end,” said Mike Owen, lobbyist for Common Good Iowa. “I think there’s a real question about that.”

Jochum echoed the sentiment. She pointed toward the commercial property tax backfill, a 2013 promise that would be phased out under the Senate tax proposal. The state’s childhood mental health system, Jochum noted, has not yet been funded through state appropriation.

“I have some real concerns about a guarantee, that we would guarantee that the money’s going to be there (for mental health),” Jochum said.

Will the House agree with the mental health changes?

The Senate subcommittee voted Monday to advance the proposal, which Dawson called “a perfect compromise.” The House has not agreed to it, Dawson said.

Last week, House Speaker Pat Grassley identified the property tax cut for the mental health system as a roadblock to compromise. He argued that, with the session already in overtime, there would not be enough time to adequately prepare for a state-funded mental health system.

“The priority for our caucus is, if we’re going to take on another social program at the state level, we have to do it right,” Grassley told reporters Wednesday.

But Dawson on Monday insisted the House proposal, which does not include the mental health changes, was not “a viable pathway forward.”

“If we don’t do it now, folks, this is never going to happen,” Dawson said. “I can promise you that.”

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Katie Akin
Katie Akin

Reporter Katie Akin began her career as an intern at PolitiFact, debunking viral fake news and fact-checking state and national politicians. She moved to Iowa in 2019 for a politics internship at the Des Moines Register, where she assisted with Iowa Caucus coverage, multimedia projects and the Register’s Iowa Poll. She became the Register’s retail reporter in early 2020, chronicling the impact of the COVID-19 pandemic on Central Iowa’s restaurants and retailers.