Local governments in Iowa started a new fiscal year on July 1. Those new fiscal years bring new budgets, and many times, new tax rates. What’s unique about this fiscal year (2023), however, is that Iowa counties are no longer tasked with paying the bill for mental health services. One key feature of 2021’s tax relief package was the phase out of the mental health levy from county property taxes, as the responsibility of mental health was shifted from counties to the state.
Mental health levies ranged from $0.00 (Audubon County) to $0.58 (Wapello County) last year. It seemed reasonable that Iowans would see cuts to their county property tax rates falling somewhere within that range, if not greater, for this new fiscal year. Putting any discussion of valuations and assessments aside, some counties really delivered cuts to their property tax rates this year, even when factoring in the mental health savings provided to them by the state. Chart 1 identifies the six Iowa counties that made the largest cuts to their urban levy rates when factoring in the elimination of the mental health levy.
Unfortunately, 48 counties did not pass along the full amount of mental health savings the state provided them. This group includes 23 counties that actually raised their rates altogether! Chart 2 identifies the six Iowa counties that made the largest increases to their urban levy rates when factoring in the elimination of the mental health levy, and Chart 3 identifies all 48 counties that withheld the mental health savings from their citizens.
An analysis of statewide data paints the same picture that county governments were not able to pass along all of the savings the Iowa Legislature created for them. The average urban levy rate for Iowa counties in 2022 was $6.23, with the mental health levy averaging $0.31 per county, or 5.0 percent of the overall rate. The average rate in 2023 was only reduced to $6.00, a reduction of just 3.8 percent. It is becoming clear that there are only so many levers the Legislature can pull to reduce the property tax burden on Iowans. It is up to local citizens to work with their local governments to identify priorities and opportunities for savings within local budgets.