A Mixed-Methods Exploration of the Implementation of Policies That Earmarked Taxes for Behavioral Health

Context: Over 200 cities and counties in the United States have implemented policies earmarking tax revenue for behavioral health services. This mixed-methods study was conducted with the aim of characterizing perceptions of the impacts of these earmarked tax policies, strengths and weaknesses of tax policy designs, and factors that influence decision making about how tax revenue is allocated for services.

Methods: Study data came from surveys completed by 274 officials involved in behavioral health earmarked tax policy implementation and 37 interviews with officials in a sample of jurisdictions with these taxes—California (n = 16), Washington (n = 12), Colorado (n = 6), and Iowa (n = 3). Interviews primarily explored perceptions of the advantages and drawbacks of the earmarked tax, perceptions of tax policy design, and factors influencing decisions about revenue allocation.

Findings: A total of 83% of respondents strongly agreed that it was better to have the tax than not, 73.2% strongly agreed that the tax increased flexibility to address complex behavioral health needs, and 65.1% strongly agreed that the tax increased the number of people served by evidence-based practices. Only 43.3%, however, strongly agreed that it was easy to satisfy tax-reporting requirements. Interviews revealed that the taxes enabled funding for services and implementation supports, such as training in the delivery of evidence-based practices, and supplemented mainstream funding sources (e.g., Medicaid). However, some interviewees also reported challenges related to volatility of funding, inequities in the distribution of tax revenue, and, in some cases, administratively burdensome tax reporting. Decisions about tax revenue allocation were influenced by goals such as reducing behavioral health care inequities, being responsive to community needs, addressing constraints of mainstream funding sources, and, to a lesser degree, supporting services considered to be evidence based.

Conclusions: Earmarked taxes are a promising financing strategy to improve access to, and quality of, behavioral health services by supplementing mainstream state and federal financing.