Capital Update for April 28, 2012

House Passes Mental Health Redesign Bill

On Tuesday, the House of Representatives gave bipartisan support to legislation redesigning the way state and local governments provide mental health services to Iowans.  The vote was the culmination of two years of work by legislators, state and county officials, service providers, and consumers to improve Iowa’s mental health system and bring it into the 21st Century.

The House passed its version of Senate File 2315.  The bill includes the creation of mental health service regions to provide local management of the system, establishment of a core set of services that would be offered in all parts of the state, and improving the data collection in the system.

The House made several revisions to the Senate language.  Primary among the changes is language that allows a county to continue operating independently if they are able to meet the requirements of a region.  The House provided counties a way to get an exemption from the region requirement.  Another change from the Senate’s language is a reduction in the number of advisory members on a local board.  Instead of requiring three consumers and providers to sit on a board, the amendment reduces to one each.

The House version also addressed funding for the system beyond FY 2013, with a redesign of the current mental health levy.  The bill would set a per capita rate that would be provided for mental health funding.  The House version calls for a per capita funding level of $47.28.  For counties whose levy is currently above the $47.28, they would have their levy reduced.  This would result in just over $10 million in property tax relief in Fiscal Year 2014.  Counties whose levy is below that amount would have the difference provided by the state.  No one’s actual property tax levy would go up, as the state would be responsible for difference.

Part of the change anticipated in the bill is the state assuming responsibility for the cost of those mental health and disability services that are covered by Medicaid.  Since some counties are concerned that the switch could leave them short of funds to pay for non-Medicaid services –

primarily for mental illness – the bill creates a one-year transition fund.  Money for the transition fund is not provided in the bill, but anticipated to be part of the overall budget agreement.

The bill also eliminated many of the mental health bills currently being disputed by counties.  Some of these bills go back as far as the 1990’s, and were written off the state books in 2010.  Counties had not been allowed to discharge these bills yet, and were forced to keep them on their books.  The bill eliminates contested bills for services provided prior to July 1, 2011.

The House version also revises the language regarding sub-acute care facilities.  The development of these facilities would provide a mid-level of service that could significantly help provide an appropriate level of service to those with mental illness, while also establishing a lower-cost service that would help control costs.

Senate File 2315 is the third piece of legislation dealing with mental health issues passed by the House this year. Governor Branstad has already signed Senate File 2247 and Senate File 2312.  Further action on Senate File 2315 is expected in the Senate shortly.

Ethanol blended Gasoline Extension 

House File 2472 – an act extending the period for determining the rates of the motor fuel tax based on calculating the distribution of ethanol blended gasoline and other motor fuel passed theHouse Waysand Means Committee 24-0 and passed on the House floor in a bipartisan manner.

Currently, an excise tax is imposed on each gallon of motor fuel (generally gasoline) sold in the state.

The general tax rate is $0. 20 cents per gallon, but subject to adjustment each 12-month period, based on a formula which produces a paired rate system for ethanol blended gasoline and motor fuel.

The current code defaults to $0.20 per gallon for Motor Fuel (not Special Fuel) after June 30th, 2012. This means theIowatax on Gasoline will go down from $0.21 to $0.20 per gallon, and Gasohol, Ethanol, Alcohol, and E85 will go up from $0.19 to $0.20.

The paired rate system is eliminated on July 1, 2012. After that date, the tax rate is uniformly imposed at 20 cents for each gallon of motor fuel.

This bill extends the paired rate system for another year (until July 1, 2013) and takes effect upon enactment.  This prevents an $8 million dollar tax increase by moving the date out one year.

Budget Negotiations Continue 

 As corn planters are starting to move across Iowa, the session and budget negotiations are still going on.  I reported last week that the House Republicans and the Governor had reached a tentative agreement.  There seems to be a roadblock to adjournment.  It is the excessive spending demands of some Senate Democrats.

They are insisting on spending more than the state collects in on-going revenue.  They are insisting on spending one-time resources for on-going responsibilities.  They are insisting on knowingly underfunding commitments setting the stage for future budget problems.

Throughout last week and this week, they have presented us with several “plans” which simply rearrange their excessive spending demands and use of one-time resources.  We have resisted their demands.

Our position is reasonable, long-term and based on simple common sense – don’t spend more than you take in, don’t spend one-time money for on-going things and don’t knowingly underfund commitments simply to make the numbers work.  Doing any of those things are the same short-term, unpredictable practices which led to widespread budget problems.

Hopefully, the differences will be worked out and the session will come to a close next week.

As always, if you have any concerns or issues that need addressing, please contact me. My email address is lee.hein@legis.state.ia.us or my phone is 319-480-1997.

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