McHenry County sales tax hike was meant to fund mental health. It brought ‘greater crisis,’ board leader said

For some clients of the Association for Individual Development, having access to the nonprofit’s help can have life-or-death stakes.

“These are really important services,” said Lore Baker, president and CEO of AID, which has an office in McHenry but works with people with developmental, physical, mental and other challenges in a large area of the Fox Valley and beyond.

But now Baker’s worried that AID won’t be able to meet the needs of those in McHenry County who rely on its services.

According to county records, the organization received about $100,000 less this year in funding from the McHenry County Mental Health Board, down from $345,725 to $245,000. For AID, board funds help cover things like psychiatric services and a certified recovery support therapist.

Baker attributed the decreased funds to the new quarter-cent sales tax for the mental health board that has brought in less than projected – the result of what McHenry County officials acknowledged was an error on their part. And AID is one of about 30 agencies and social-service nonprofits that rely in part on the revenue.

AID was part of a broad coalition that advocated for the countywide sales tax, to which voters gave their blessing on the Spring 2024 primary ballot. Even the oft tax-averse local Republican Party endorsed the referendum, in part because it promised a decrease in the county’s property tax levy in exchange.

But so far, the revenue that the mental health sales tax has brought has been about 20% off the county’s estimate that it would average about $1 million per month. And though the revenue varies from month to month and could pick up, the county’s estimate had a mistake baked into it: It was assumed that the tax would apply to auto sales, but that turned out not to be the case, per state law.

Baker said AID will continue to fundraise to try to fill in gaps.

Another agency that has receives funds from the mental health board is Clearbrook, which provides services to people with developmental disabilities. Clearbrook’s space in Crystal Lake was funded through the board, whose revenue also helps pay for services to those who can’t get funding from the state, Emily Fencl, the organization’s vice president of program services, said.

As a large agency, Clearbrook is able to draw from many funding sources including through community development block grants, the United Way, the Community Foundation for McHenry County and private donors to raise funds. Every piece is important, and the mental health board funding is key to supporting many local nonprofits and the McHenry County residents whom they serve, Fenci said.

The shortfall has forced the mental health board to tap into its reserves to fund operations, board officials said, and has even prompted talk of going back to voters for another sales tax increase, though it’s far less certain whether the county board would support another such effort.

Officials first learned of the funding gap in October, when the first month’s receipts of the higher sales tax came in for July at just over $800,000. September receipts, the third month of available data, came in slightly lower.

And while the mental health board received $11 million in property taxes for 2024, it’s now projected to receive less than that, or about $10 million, under the sales tax in the 2025 fiscal year.

The mental health board allocated just over $10 million for 2025. Because of the financial uncertainty, the board did not fund any new agencies this year, according to records. While some agencies did get a little more funding for 2025, several others, including AID, received less. Those include Rosecrance, Pioneer Center for Human Services and Northern Illinois Recovery Center, records show.

Mental health board officials sounded the alarm at meeting in December that the board’s cash flow was less than its monthly expenses.

Board member Lindsay Keisman, who leads the finance and audit committee, said it would be a “shame” for the board not to consider another referendum.

She said if the board goes back to voters, it would need to have a concrete explanation of “what could be done with this.” There was also discussion of seeking additional state funding.

But mental health board Executive Director Leonetta Rizzi said the current situation – using reserves to support operations – is not sustainable.

“We we are now using reserves to subsidize our budget as a temporary solution before we are forced to make cuts to providers in the future if another referendum isn’t supported,” Rizzi wrote to in her November board report. She acknowledged there had been mention of spending cuts but said they were not the answer.

“There have been no solutions offered to date by the County Board regarding our levy with the incorrect projections ... which inadvertently misled voters who” approved the sales tax, Rizzi also wrote in that report. “Moving to the [quarter-cent] sales tax has put us in a worse situation.”

She wrote that it now appears that the board might not reach its pre-sales tax funding level of $11 million until 2028, “which is not guaranteed.”

Rizzi wrote that an analysis found the board needed at least $15 million in funding for fiscal year 2025, excluding strategic initiative funds.

“With being approximately $4M in levy short overall from what we need today and also in jeopardy of having to make cuts in the future, we are in a greater crisis state today,” Rizzi wrote.

Records obtained by the Northwest Herald through a Freedom of Information Act request show Rizzi reached out to the Illinois Department of Revenue in October when the July receipts came in.

Rizzi asked if the department could investigate the shortfall. Department officials said they didn’t have the staff to do so, but noted the county could have asked for a three-year lookback estimate before the tax was implemented, but nobody asked for one.

Rizzi asked for the estimate, which stated the Mental Health Board would have gotten about $28.15 million from September 2021 to August 2024 had the sales tax been in effect during that time, or between about $9.1 million and $9.7 million per year, according to a document obtained through a FOIA request.

County leaders have said they plan to work with the mental health board staff to develop and refine a new financial model. Any supplemental funding from the county would be a county board decision, McHenry County Chief Financial Officer Kerri Wisz said.

She recognized the mental health board was starting with less than anticipated, but said the sales tax is still a better tool to fund the mental health board because it doesn’t have to rely on the county board for funding, and sales tax tends to grow over time.