Iowa Governor Signs Tax Cut, Mental Health Care Funding Law

Iowa Gov. Kim Reynolds gives remarks before signing a sweeping tax cut package that cuts income and property taxes, eliminates the inheritance tax and realigns the state's mental health funding system, on Wednesday, June, 16, 2021, at YSS, in Ames, Iowa. (Kelsey Kremer/The Des Moines Register via AP)
Iowa Gov. Kim Reynolds gives remarks before signing a sweeping tax cut package that cuts income and property taxes, eliminates the inheritance tax and realigns the state's mental health funding system, on Wednesday, June, 16, 2021, at YSS, in Ames, Iowa. (Kelsey Kremer/The Des Moines Register via AP)
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DES MOINES, Iowa (AP) — Iowa. Gov. Kim Reynolds on Wednesday signed into law a tax bill that requires the state to take over funding of mental health services, removing them from local property taxes.

The measure also phases out the state inheritance tax by 2025, allows income tax cuts approved three years ago to begin in January 2023, and provides increased housing child care tax credits.

It also eliminates state funding to cities, counties and schools intended to restore lost money from a previous commercial property tax cut lawmakers approved in 2013. Some city officials have complained that the state reneging on that promise will cut hundreds of thousands of dollars from their local budgets and could result in future property tax increases to sustain services to citizens.

While Iowa is one of the last states to pay mental health care services from property taxes, some critics said they fear the state could cut funding in the future if it runs into a drop in tax revenue.

Reynolds promised the law, which includes increased money if state revenue increases, will provide reliable funding for the state’s mental health system.

She added that she plans on proposing next year additional income tax cuts.