Sen. Dan Dawson

State Senator Dan Dawson (R-Council Bluffs)

(Des Moines) -- The Iowa Senate has approved a proposal that would drastically change the way mental health is funded throughout the state.

On a 30-17 vote, the Senate approved SF587, which would shift funding for mental health regions away from property taxes levied by cities and counties and move the funding source to the state level. Senator Dan Dawson -- a Republican from Council Bluffs -- says the proposal is part of a large tax reform package.

"With the record assessments occurring across the state of Iowa from the pandemic last year and the historic housing market, valuations are rising," said Dawson.  "People need property tax relief.  People also come forward year-after-year and say we need a better way to fund mental health.  We do that in this bill right here."

Under the proposal, counties would still maintain authority over mental health disability regions, but the funding would come from the state's general fund instead of local property taxes.

"Currently, right now in Iowa we have a disparity across the state," said Dawson.  "Depending on what region you're in, determines how much money is spent upon you.  This wipes away the property tax levy and treats all Iowans equally on a per person distribution basis across the state.  So, no matter where you are in Iowa, you will receive the same quality mental health funding as any other place in the state and care."

In order to offset the cost to the state of funding mental health services, the bill would end backfill payments to cities, counties and schools. The backfill payments were instituted as a way to make up for a property tax cuts in 2013, by having the state pay back the lost revenue to local governments. Dawson says it's all part of a give-and-take approach.

"Coupled with the mental health funding, the Senate idea -- the Senate proposal -- is that the state of Iowa will assume all of the responsibility for funding mental health up front," said Dawson.  "But, we ask cities and counties to have some skin in the game.  While we assume the responsibility for funding up front, we also ask the cities and counties to basically use some of that backfill money to help pay for this larger system."

The bill would also eliminate the Public Education and Recreation Levy that's in use in 27 school districts in the state and would give a property tax credit for Iowans over 70 with low incomes. Democrats opposed the bill, instead offering an amendment that would only retain the elderly property tax credit. Dawson says that's not enough.

"We did not come here to do halfsies," said Dawson.  "We came here to do bold reforms.  This bill in its entirety is bold reform.  So I think anything less would be doing a disservice to the people of Iowa."

The proposal faces an uncertain future in the Iowa House.

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