‘Somebody dropped the ball’: McHenry County sales tax for mental health falls short due to estimation error

Before McHenry County voters signed off last spring on a quarter-cent sales tax increase to fund mental health services, officials estimated the new revenue stream would bring in on average about $1 million a month to the McHenry County Mental Health Board.

But when the first month of receipts came in earlier this month from the sales tax increase that took effect in July, the amount was significantly lower, just over $800,000.

County leaders acknowledge they erred in projecting how much the sales tax would generate because they included revenue from car sales – but the tax doesn’t apply to car sales, per state law.

When the difference between the projections and the first month’s reality was discovered earlier this month, officials from the mental health board indicated they might need to cut back next year’s funding to this year’s levels, and deny funding to new programs, despite growing demand. The board provides grants to an array of local agencies and organizations that provide services to people with mental illness, substance use disorders and developmental disabilities. Pioneer Center for Human Services in McHenry, Youth and Family Center of McHenry County in McHenry, Family Health Partnership Clinic in Crystal Lake and Rosecrance Crystal Lake are just a few of them.

But county officials said Monday that, in part because of money they anticipate will be left over from this year’s budget, the mental health board is still expected to see an increase in its county funding of about $1 million. County Chief Financial Officer Kerri Wisz said the Mental Health Board is projected to end the current fiscal year on Dec. 1 with $11.1 million in reserves.

Some of that comes from the county’s 2024 property tax levy, the last to support the mental health board, since the sales tax was sold to voters on the promise that it would replace the former property tax funding stream and allow the county to lower its property tax levy accordingly.

Because of the five-month overlap of the two funding streams, county official said Monday the mental health board will bring in $24 million over the next two years from sales tax and property tax combined.

Officials also noted that, because the 0.25% sales tax is new, some retailers might be lagging in collecting the tax and sharing it with the Illinois Department of Revenue, which is responsible for administering it. And, county officials said, one month doesn’t tell the whole story, since spending varies month to month.

McHenry County Administrator Peter Austin said the sales tax is still a superior funding mechanism for mental health services in that it’s likely to continue to grow, and it gives the mental health board more autonomy from the county board.

Last fall, the county board levied nearly $11 million for the mental health board after a contentious debate on how much to fund the services. Weeks later, county board members voted to give the electorate a say in whether to keep levying a property tax or change to a sales tax model.

The question appeared on the March primary ballot, and voters chose to approve the sales tax, with “yes” getting roughly 53% of the vote.

With the referendum’s success, county board members said they will take out the mental health board portion of their property tax levy. That vote on the 2025 levy and budget is expected in November, after the general election in which half the board seats are up.

After the sales tax calculation error was discovered, McHenry County Mental Health Board Executive Director Leonetta Rizzi initially wrote in an Oct. 16 email that revenues were short and the board would need to proceed with a flat funding scheme for 2025. Officials said that was before they had a chance to recalculate and found they were able to grow their budget for next year after all.

In a report from Rizzi to the Mental Health Board included in a Tuesday meeting packet, the board had a roughly $10.8 million client service budget, plus $650,000 from an opioid lawsuit settlement. Documents indicate the mental health board also plans to take 4% out of the investments to supplement the client service budget.

If the $805,000 generated in July by the new sales tax turns out to be the monthly average, the board could end up $2 million short next year, Rizzi said in the memo, though county officials stressed Monday they don’t expect that to be the case and said the health board’s fund balances will help cover any budget gaps.

During a mental health board meeting last week, board member Mike Baber assessed the miscalculated revenue projection by saying: “In the private world, you’d be out of here so fast.”

“Somebody dropped the ball and it wasn’t us,” Baber said.

Board member Lindsay Keisman said the county moved forward with the sales tax in good faith. Keisman later said she was in favor of keeping the budget lean.

“We need to be fiscally responsible” and give it a year or two, Keisman said.

But she said her biggest goal on the board is to maintain amazing services and she didn’t want to “pigeonhole” certain things.

Rizzi said in response to a board member question the provider community has been “wonderful” and thinks they’re just as disappointed as the board is.

Despite talk of keeping the funding levels flat for 2025, the mental health board voted to approve grants that outpace the current year’s funding. But there will be another meeting Nov. 6 to finalize the budget, county officials said. The board allocated slightly more than $10 million for the current year, plus just over $500,000 for programs funded by opioid settlement funds.

Democratic McHenry County Board member Kelli Wegener, who is currently running for county board chair against Republican incumbent Mike Buehler, sought to blame her opponent for the snafu.

“This was a calculation error made by the McHenry County Government. To date, we have not received any acknowledgment of this mistake nor a public apology from Mr. Buehler to the Mental Health Board. Furthermore, there have been no discussions with the Mental Health Board about how to address this issue and ensure that these essential services remain intact,” Wegener said in a news release Friday.

When asked what she would do differently, Wegener said she would have sought to wait on the sales tax referendum until the November ballot, to give county officials more time for research and make sure the numbers were correct. If an error was discovered later, Wegener said she would have communicated it and at least investigated to see how the county can help.

Wegener was among those who voted to place the question on the March ballot. Wegener said Monday she was opposed to the referendum’s timing but supported the additional funding.

When asked his response to Wegener’s political finger-pointing, Buehler said “one month does not a trend make” and thought it was premature to pass judgment on the mental health funding program.