Iowa Governor Kim Reynolds signed a sweeping tax bill on Wednesday that allows for further income tax cuts, back payments to local governments to expire, and mental health funding to shift from local property taxes to the state.
At a law-signing event at Youth and Shelter Services in Ames, Reynolds called it “landmark tax reform legislation”.
“Overall, today’s bill heralds a new era of freedom, growth and opportunity in Iowa,” she said.
Reynolds on Wednesday highlighted the bill’s impact on mental health funding. The new law will end the county property tax levy, which currently brings in revenue to fund the state’s 14 mental health regions. Instead, the state will fund its budget each year, and the new law aims to give the state more powers to ensure that mental health regions provide the services required by law.
Reynolds said the new structure will provide wealth tax relief and complete the work on mental health services that she began when she took office as governor in 2017.
“With all of the improvements we’ve made, the last piece of the puzzle was missing: a stable and reliable source of funding,” said Reynolds. “With my signature today, the missing piece finally fits.”
Andrew Allen, President and CEO of YSS, said the changes will improve access to behavioral health services in Iowa.
“This work is so important and so much is at stake,” said Allen. “The need is so great, especially for our youth.”
Another mental health provision in the bill requires insurance companies to pay the same tariff for personal and telemedical mental health services.
The new law also lifts the income thresholds from a 2018 tax law that will allow further income tax cuts to come into effect in 2023.
Reynolds said she plans to push through more income tax cuts next year.
“If we collect too much, we should make sure that we return the money to them [taxpayers]”She said.” And the other thing is that states across the country keep overturning theirs. And if we want to stay competitive, we have to look at this further. “
The new law provides for the expansion of a tax credit for childcare, more funds for affordable housing programs, a sales tax break for blackboards and other tax changes.
Many stakeholders have expressed support for the new law, but local governments and some Democrats have opposed the provision to expire back payments to cities and counties.