The Dubuque County Board of Supervisors and staff on Tuesday attempted to plot a course through several new provisions in state legislation that could have major implications for local mental health funding.
The bill, Senate File 619 — a broad tax reform bill approved by the Iowa Senate and House — removes property tax levy authority to pay for mental health from county governments. Instead, the state government would pay Iowa’s mental health regions from the state general fund.
Iowa Gov. Kim Reynolds had yet to sign the bill into law as of 4 p.m. Tuesday.
This rule is phased in. It directs counties to levy a maximum of $21.14 per capita in the fiscal year beginning July 1. That maximum would then drop to $0 the following fiscal year. Dubuque County’s previously approved mental health levy was $30.20.
Another change, though, requires regions, and therefore counties, to spend off the fund balances they have built up to date.
“There are triggers in the bill where regions are not allowed to have more than a 40% fund balance beginning next year,” explained Dubuque County Budget Director Stella Runde. “Then it drops to a 20% fund balance the following year and to a 5% fund balance the year after that. Then, the regions won’t be allowed to use fund balances at all. They will be taken by the state.”
These two rules together are already proving difficult to manage.
During a meeting last week of the board of Mental Health/ Disabilities Services of the East Central Region — the nine-county region to which Dubuque County belongs — a majority of members voted to request member counties reduce their levies even lower than the required $21.14 per capita maximum in the new bill. The board asked counties to reduce to $0 per capita immediately.
Anything more, board members noted, would add to the region’s fund balances that would already exceed maximums in the bill. “Based on their calculations, if all counties in the region levy at $0, we’ll still be at 50% fund balance at the end of the fiscal year,” Runde said. “They will not be taking draws from any county this year for operations. So, if we levy anything more than zero, we’re going to end up with a large fund balance, which will be taken by the region at the end of the year. The region will then receive less money from the state.” Supervisor Jay Wickham supported that reduction to $0 per capita. “I don’t see any benefit in being at that higher level,” he said. “The state — all three branches, assuming the governor signs it — are elected just like we are. They’re in charge of the state and they want mental health out of the property tax.”
Reducing the county’s level to $0 per capita would still leave more than a $1 million fund balance for Dubuque County, which would revert to the state if not spent.
“Is that funds we can spend, with (the region’s) permission? We know we need an access hub here,” said Supervisor Ann McDonough. “The Community Foundation (of Greater Dubuque) has done research and data collection. Can we use that $1 million? Isn’t that our money inside our region to make Dubuque County projects stand up?”
Runde said she would look for ways to spend, if not encumber that money, so it is locked in.
But the situation grew more complicated in the hours after Tuesday’s meeting. Runde emailed the Iowa Department of Management about the county’s intention to lower the levy past the $21.14 maximum.
The department said the county’s budget for fiscal year 2022, however, is locked in, untouchable by the county.
“There is no opportunity for the county to act on the FY22 budget at this point,” read an emailed response from the Department of Management. “It has already been certified to DOM for DOM’s finalization, and only DOM can make changes at this point.”
McDonough explained the issue was tied to legal notice and reporting requirements regarding the county’s budgets.
“There’s not enough time to publish the notice and go through all of the documents,” she said. “The county can’t do that. The region can’t do that. The question really is, can the Department of Management even do that?”
Then, if the county cannot reduce past the maximum, it would have even more money in its reserves to spend.
“If we just reduce to the $21.14, we’ll end with a $3 million fund balance that the state will take at the end of the year, unless we can find a way to spend it,” Runde said.
Runde did not respond to requests for comment or dollar figures regarding taxpayer savings in these scenarios. But, McDonough said the difference would be significant.