- Associated Press - Monday, January 8, 2018

DES MOINES, Iowa (AP) - Iowa lawmakers returned Monday to the state Capitol for a new legislative session that’s expected to be dominated by a GOP-led effort to cut taxes despite a constrained budget and growing pressure over ongoing problems with Iowa’s privatized Medicaid program.

The Republican-controlled chambers convened in Des Moines for a mostly ceremonial day of speeches, where GOP leaders said overhauling Iowa’s tax code will be a top priority. Republicans, including Gov. Kim Reynolds, have yet to provide details of a tax proposal amid lower-than-expected revenue to fund the roughly $7.2 billion budget.

That financial reality has led to a range of spending reductions to government departments in recent years. Any tax plan in Iowa would come on the heels of a $1.5 trillion tax package passed in Congress, which Iowa budget officials are still reviewing to understand its impact on state revenue.

Reynolds told reporters Monday she wants a tax plan that creates a more competitive business environment and reduces individual taxes.

“We ought to do everything that we can to make sure that they get to keep more of their hard earned money,” she said about Iowa taxpayers.

Reynolds, presiding over her first legislative session as governor since being sworn in last May, will lay out her priorities in a Condition of the State address on Tuesday. Reynolds is expected to mention tax cuts, workforce development and efforts to finalize water quality legislation that’s failed to gain enough traction for several sessions.

Democrats, who have little legislative power, criticized Republicans last session for passing bills the minority party considered bad for workers. They included eliminating many collective bargaining rights for most public workers, cutting workers’ compensation benefits and banning local county officials from raising the minimum hourly wage. Republicans defend the policies as helping businesses maintain costs.

Democrats are expected to make a lot of noise as both parties prepare for the upcoming midterm election. All House seats and half in the Senate are up for grabs, and Reynolds is seeking her first four-year term as governor.

House Minority Leader Mark Smith, a Marshalltown Democrat, used prepared remarks to accuse Reynolds of illegally transferring $13 million from an emergency fund a few months ago to balance the state budget. The issue is the subject of a lawsuit by a Democratic state representative who claims that emergency budget conditions weren’t met to merit the fund transfer. Reynolds has called the lawsuit politically motivated. The topic is expected to spur a technical change to state law, which Democrats say is a sign of wrongdoing.

Lawmakers are also expected to review whether the state’s privatized Medicaid program is working. The federal-state health care program for poor and disabled Iowans was privatized in 2016, and health care providers and patients have complained since of reduced services and delayed reimbursement payments.

The Iowa Department of Human Services, which oversees the roughly $4 billion program now run by two insurance companies, said it’s working on changes. GOP lawmakers didn’t bring up Medicaid in their Monday speeches though House Speaker Linda Upmeyer has indicated she expects DHS to take action or lawmakers will make improvements.

“This system has to be in a better position,” the Clear Lake Republican told reporters last week.

Reynolds is a staunch supporter of the privatized Medicaid program but has acknowledged “mistakes were made” in the transition, a point she repeated at Monday’s press conference. She’s said changes can be made to the program without legislative action.

Reynolds also defended new data from state officials that shows the privatized Medicaid system is saving Iowa less than a quarter of what was originally estimated for this budget year.

“We’re still talking about savings,” Reynolds said about the data. “Really when you look at the old system, it was out of control and it was unsustainable and it needed to change.”

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