Property tax bill includes unwelcome surprises

The Iowa Senate this week approved a massive tax bill that changes the way regional mental health services are funded in the state. But it seems the bill’s main objective is property tax relief, with mental health funding as a secondary concern.

Iowa’s underfunded mental health system is a prime concern for many Iowans struggling to receive care for themselves or loved ones. It’s been a front-burner issue for voters, with candidates of all parties promising to address the system’s many issues.

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Iowa Senate passes mental health funding changes

Republicans who run the Legislature have proposed a state takeover of regional mental health funding now provided by county property taxes. The current property tax levy that pays for services would be phased out over the next two budget years.

That money would be replaced by a per capita state appropriation to counties. It would provide $60 million in year one and $120 million in year two. In Fiscal Year 2026 and beyond, funding increases would be tied to state sales tax growth, but would be capped at 1.5 percent.

The bill also phases out “backfill” payments to local governments replacing revenue lost to the last big property tax reduction bill in 2013.

We’re not opposed to state funding for mental health. Ideally, the Legislature would make a state investment in the system in addition to local funding, which is inadequate but stable. Now, mental health funding will be thrown into the churn of Statehouse politics. Ask Iowa’s school district leaders how expanded per-student state funding has worked for them.

Republicans say the bill’s “math works,” but there’s been precious little talk of whether it will actually strengthen the state’s mental health system. Funding will be increased, which is good, but what are the resources regions actually need? This is about more than balancing a spread sheet.

The bill has surprises tucked among its pages. It eliminates a voter-approved property tax levy schools can use maintain playgrounds and other recreational facilities open to the public. It also eliminates an income tax credit for Iowans who donate land to conservation organizations and makes it tougher to receive a property tax credit for forest land. All bad ideas.

Eliminating the backfill will cause budgetary difficulties for some local governments. But the payments were never meant to be permanent. This phase out has been a possibility for years, giving communities time to prepare.

The bill is headed to the House. We’d like to hear far more from Republicans on how it will make critical mental health services better and more accessible to Iowans. That should be the priority.

(319) 398-8262; editorial@thegazette.com