Earmarked Taxes for Mental Health Services in the United States: A Local and State Legal Mapping Study

Abstract

Local governments are increasingly adopting policies that earmark taxes for mental health services, and approximately 30% of the US population lives in a jurisdiction with such a policy. Policies earmarking taxes for mental health services are heterogenous in their design, spending requirements, and oversight. In many jurisdictions, the annual per capita revenue generated by these taxes exceeds that of some major federal funding sources for mental health. Context State and local governments have been adopting taxes that earmark (i.e., dedicate) revenue for mental health. However, this emergent financing model has not been systematically assessed. We sought to identify all jurisdictions in the United States with policies earmarking taxes for mental health services and characterize attributes of these taxes. Methods A legal mapping study was conducted. Literature reviews and 11 key informant interviews informed search strings. We then searched legal databases (HeinOnline, Cheetah tax repository) and municipal data sources. We collected information on the year the tax went into effect, passage by ballot initiative (yes/no), tax base, tax rate, and revenue generated annually (gross and per capita). Findings We identified 207 policies earmarking taxes for mental health services (95.7% local, 4.3% state, 95.7% passed via ballot initiative). Property taxes (73.9%) and sales taxes/fees (25.1%) were most common. There was substantial heterogeneity in tax design, spending requirements, and oversight. Approximately 30% of the US population lives in a jurisdiction with a tax earmarked for mental health, and these taxes generate over $3.57 billion annually. The median per capita annual revenue generated by these taxes was $18.59 (range = $0.04‐$197.09). Per capita annual revenue exceeded $25.00 in 63 jurisdictions (about five times annual per capita spending for mental health provided by the US Substance Abuse and Mental Health Services Administration). Conclusions Policies earmarking taxes for mental health services are diverse in design and are an increasingly common local financing strategy. The revenue generated by these taxes is substantial in many jurisdictions.

From plan to practice: A qualitative study of public mental health therapists’ session-planning practices.

“…Public mental health service systems need additional financial resources in order to provide ongoing training and consultation to clinicians, to assign therapists lower caseloads, to hire more staff, and to offer therapists more time in between sessions. Thus, in addition to assessing the effectiveness of these recommendations, continued research on the effectiveness of policy efforts to improve funding for public mental health services is also needed (Purtle et al, 2023; Purtle & Stadnick, 2020).…”

Comparing organization-focused and state-focused financing strategies on provider-level reach of a youth substance use treatment model: a mixed-method study

“…Another important future direction is our planned state-level case study analyses [48,49], in which we will incorporate additional data sources (e.g., state-level reach rates, documents provided by state administrators) to compare and contrast states' state-focused grant activities and outcomes [25]. The effectiveness of state-focused grants likely depends on each state's policy context-which can vary dramatically [50]. This conclusion is supported by our findings that certain states were successful at developing infrastructure to support ongoing A-CRA implementation (e.g., new funding mechanisms).…”

Acceptability and feasibility of policy implementation strategies for taxes earmarked for behavioral health services

“…These professionals were in positions such as, but not limited to, tax coordinators, leaders of state and county behavioral health agencies, and members of county tax advisory boards. Jurisdictions with policies that earmarked taxes for behavioral health were identified through the aforementioned legal mapping study ( 30 ). The survey sample frame was created of professionals involved with earmarked tax policy implementation in seven states: California, Washington, Ohio, Illinois, Missouri, Colorado, and Kansas.…”

“…In short, an earmarked tax is one placed on a specific base (e.g., goods, property, income) for which revenue is dedicated to a specific purpose ( 32 – 34 ). As of 2022, a legal mapping study found that there were at least 207 policies in the United States that earmark tax revenue for behavioral health services and that the number of jurisdictions adopting these policies has increased drastically over the past two decades ( 30 ). These taxes generate a substantial amount of revenue, about $3.57 billion annually, and approximately 30% of the U.S. population lives in a jurisdiction with such a tax ( 30 ).…”