Iowa mental health care advocates hail shift in funding


New law moves support from local property taxes to state

Iowa mental health care advocates hail shift in funding

Surrounded by state lawmakers and mental health care advocates and stakeholders, Iowa Gov. Kim Reynolds on Wednesday signs into law a package of state tax reforms during a public ceremony at YSS in Ames. The package transitions funding for mental health program from local property taxes to the state’s general fund. (Erin Murphy/Gazette-Lee Des Moines Bureau)

AMES — Friederich Burson said he has benefited from the help offered by a nonprofit youth support services organization, and he hopes a new state law will help others in need of such help.

“This will ensure that others can succeed just like I have,” the 17-year-old from Sioux City said during a Wednesday bill-signing ceremony at YSS in Ames.

Dozens of mental health care advocates were on hand to witness Iowa Gov. Kim Reynolds sign into law Senate File 619, which includes a wide range of tax provisions, including gradually shifting mental health care funding from local property taxes to the state general fund.

“It’s big, and it’s important,” said Peggy Huppert, executive director of Iowa’s chapter of the National Alliance on Mental Illness. “It was an antiquated way of funding services, and it did not encourage collaboration … because every county was so concerned with what their (mental health property tax) levy was.”

Andrew Allen, president and CEO of YSS, called Wednesday “a big day for Iowans” as the new mental health care funding method was signed into law.

“Today brings hope and opportunity to millions of Iowans, gives them access to behavioral health services statewide,” Allen said. “This work is so important, and the stakes are so high, and the needs are so great.”

Reynolds described the new funding system as a “steady and reliable funding source” that puts mental health care services “on firm footing for decades to come” and creates “sustainability and predictability.”

The gradual funding shift from local property taxes to the state will require additional state spending.

The shift will cost the state a projected $120.3 million in the fiscal year that ends in June 2023, increasing to $145.9 million by 2030, according to the state’s nonpartisan fiscal analysis agency.

Iowa Democratic Party Chairman Ross Wilburn, who is also a Democratic state lawmaker from Ames, asserted the new law does not necessarily ensure adequate funding for mental health care services.

By shifting the funding mechanism to the state, that funding will be a part of the annual state budgeting process conducted by the governor and state lawmakers, he said.

“Our health care system in Iowa is in crisis and struggling to recover from the pandemic,” Wilburn said in a statement. “We should focus on investing more money into mental health care to provide Iowans with the critical support so many still don’t have access to.”

The new law also contains a provision that requires mental health care providers be reimbursed for virtual services at the same rateas they are for in-person services. The so-called tele-health parity was another provision sought by mental health care advocates and stakeholders.

The bill also:

  • Phases out Iowa’s inheritance tax.
  • Phases out the state “backfill” that cities, counties and schools have received.
  • Accelerates the income tax “triggers” that ends federal deductibility and simplifies tax brackets.
  • Allocates more money for affordable housing options.

Democrats have warned the $100 million in property tax relief that Republicans project from the state takeover of mental health finding is more than offset by a $153 million property tax increase to make up for the loss of the “backfill.”

The backfill is funding legislators promised cities, counties and schools in 2013 when lawmakers, in a bipartisan tax package, lowered the commercial and industrial property tax rate.

The backfill, which Republicans say amounts to less than 2 percent of local government budgets, will be phased out over the next five to eight years.

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James Q. Lynch of The Gazette contributed to this report.


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