McHenry County’s Sales Tax Hike: A Mental Health Misfire?

Imagine a lifeline that hangs in the balance, where the help provided isn’t just a luxury but a necessity for survival. For many clients of a local nonprofit, the services offered can mean the difference between hope and despair.

“These services are absolutely vital,” expressed the passionate president and CEO of the organization, which operates in McHenry and beyond, serving individuals facing developmental, physical, and mental challenges across the expansive Fox Valley region.

Yet, there’s a growing concern that this nonprofit may not be able to meet the ever-increasing needs of McHenry County residents who rely on their crucial services.

Recent county records reveal a troubling decline: funding from the McHenry County Mental Health Board has plummeted by about $100,000 this year, dropping from $345,725 to $245,000. This loss directly affects essential services like psychiatric care and access to certified recovery support therapists.

The root of this funding crisis? A new quarter-cent sales tax that was expected to generate significant revenue but has fallen short—an unfortunate oversight acknowledged by county officials.

This nonprofit was a key player in the push for the countywide sales tax, which received overwhelming support from voters in the March elections. Even the typically tax-averse local Republican Party backed the initiative, enticed by promises of reduced property taxes.

However, the anticipated revenue has been disappointing, with earnings approximately 20% below projections. What’s more, a crucial miscalculation assumed the tax would apply to auto sales—a misstep that has further destabilized funding.

In response to this financial shortfall, the organization is actively seeking new fundraising opportunities to bridge the gaps.

Another vital organization that benefits from the mental health board’s funding is Clearbrook, dedicated to providing services to individuals with developmental disabilities. Their facility in Crystal Lake was established thanks to board funding, which also supports individuals unable to secure state funding, according to the organization’s vice president of program services.

Clearbrook is fortunate to tap into a diverse array of funding sources, including community development block grants, United Way contributions, and private donations. However, as emphasized by the vice president, the mental health board funding remains a cornerstone for many local nonprofits and the residents they serve.

The funding shortages have necessitated the mental health board to dip into its reserves just to sustain operations. This financial strain has initiated discussions about the possibility of approaching voters for another sales tax increase—though the likelihood of gaining support from the county board remains uncertain.

In October, officials were alerted to the funding gap as the first month’s receipts fell short of expectations, revealing dire financial realities. The board had initially projected $11 million in property tax revenue for 2024; however, they now foresee a decline to around $10 million for the 2025 fiscal year.

Despite allocating just over $10 million for 2025, financial uncertainties have led the board to halt funding for new agencies this year. While some nonprofits received marginal increases, several, including the one mentioned, faced cuts.

Alarm bells were ringing during a December meeting, where board members acknowledged the dire cash flow situation compared to their monthly expenditures.

A board member echoed a sentiment many feel: it would be a tragedy for the board not to seek another referendum, especially when clearer paths to funding can be outlined to the community.

However, the Executive Director has raised concerns about sustainability, emphasizing that the current use of reserves is a short-term fix that will ultimately lead to service cuts if additional funding isn’t secured.

In her report, she called attention to the misleading projections that influenced voter decisions regarding the sales tax. The shift to the new tax model has unexpectedly put the board in a precarious position, meaning they may not regain previous funding levels until 2028, which is far from certain.

An analysis indicated that the board would require at least $15 million in funding for fiscal year 2025 alone, yet they are currently facing a $4 million shortfall. The current financial climate places these critical services in jeopardy.

In a bid to address this funding crisis, the Executive Director reached out to the Illinois Department of Revenue for assistance—but was met with an unfortunate response. The department indicated they lacked the resources to investigate the funding shortfall.

Looking ahead, county leaders are committed to collaborating with the mental health board to devise a new financial strategy, but any additional funding would ultimately hinge on decisions made by the county board.

The Chief Financial Officer acknowledged the board’s current funding struggles, yet believes the sales tax remains a more reliable funding source for mental health initiatives in the long term.