Senate postpones decision on LBJ bill, awaits reports
Gov. Togiola Tulafono’s $10 million appropriation bill for the LBJ Medical Center remains with the Senate Budget and Appropriations Committee awaiting financial reports from the government before making a final decision on the measure that would provide funding for the off-island medical referral program.
Committee chairman Sen. Lemalu Peleti Mauga called the hearing after the governor met with lawmakers Wednesday in the Senate chamber. The governor there pitched his reasons for proposing two money bills to help the financially troubled LBJ and to dissolve the hospital and transfer it to the executive branch under the Department of Health.
At yesterday’s hearing, Sen. Velega Savali Jr. was the first to speak, informing his colleagues that the excise tax increase, hike in business licenses fees and a new 4% wage tax to fund the $10 million is not a new issue and the Senate opposed last year such drastic hikes.
He also pointed out that the proposed increase to business license fees is about 700%. He noted, for example, the drastic hike in an alcoholic beverage establishment’s business license with beer tavern, which jumped from the current $50 to $350.
Alcoholic beverage licenses jump from $75 to $535 under the proposed bill, while a business license for an alcoholic beverage importer and vendor goes from $1,000 to $2,100.
Velega believes the government will not be able to collect the new revenues under the proposed increases for taxes and business licenses because they are too high. He acknowledged that the hospital needs additional funds, but added that it’s the public that will carry the burden of these increases.
Sen. Fuamatu J.V. Fuamatu said LBJ’s financial woes are no secret any more and the focus of this measure to assist the hospital. He also points out that the cost of living is on the rise, but something needs to be done to help the hospital.
He said someone will have to pay for the current needs of the hospital— including businesses— through fees and taxes. However, he said that if the proposed fees and taxes are too high at this point, the Senate could reduce them to something affordable.
Sen. Avegalio Aigamaua said he was approached by some business owners asking that legislators not pass this measure; however, if the proposed hikes are too high, they can be reduced down. He said that when it comes to raising taxes, people will continue to ask questions and the final decision rests with the Fono.
What remains unclear at this point is, how much money the government is expected to collect from these proposed hikes, said Avegalio, who added that the Fono must approve some financial aid for the hospital.
Sen. Mauga T. Asuega said he supports the call by the governor for long-term financial solutions for the hospital, but his concern centers around the use of the $10 million by LBJ where there are persisting questions from the Senate over the handling of money by the current management of LBJ.
As for a solution from the Fono, Mauga points out that the Senate has already proposed a $2 million refinance loan with the ASG Employees Retirement Fund, and that bill is pending in the House.
Additionally, the $3 million loan from the Workmen’s Compensation Account was approved and signed into law. He said the new 2% wage tax as a funding source for the repayment of the loan can be used to fund other operations of the hospital once the loan is paid off. He said it would take about 12 months to pay off the loan and thereafter the hospital will get additional funds.
Sen. Lualemaga Faoa agreed that there is a need to provide sufficient funds for the hospital but he is concerned with the drastic hikes in excise taxes and business license fees to pay for the $10 million bill.
He said the Fono needs to come up with a solution and suggested using current revenue sources earmarked for the $3 million loan and the $20 million loan to cover the $10 million appropriation. He said once these two loans are paid off, then all revenues thereafter are to go towards the hospital’s medical referral program.
Sen. Fuata Dr. Tagiilima Iatala told senators that this has been a long standing problem with LBJ but the Senate is now given only a couple of days during the special session to resolve it.
Sen. Paogofie Fiaigoa said he fully supports the bill and asked his colleagues to do the same. He also pointed out that the current business licenses fees were implemented more than 30 years ago and have not changed.
Velega said his question is, “where have you been?” or where was the government all these years —and “Why now?”
He said the government wants to impose this 700% hike in license fees but they should have been implemented in increments. He said no local business can absorb all these taxes and fee hikes and they will be passed on to consumers. He concurred that another revenue measure for the hospital is the Senate-sponsored $2 million refinance bill pending in the House.
Senate President Gaoteote Tofau Palaie said he has already informed the governor that the Senate has rejected the two new board members for LBJ’s board of directors; has rejected the $8 million loan; and the bill to dissolve the hospital authority and transfer it to the executive branch is tabled in committee—which means it will stay there forever.
He said the only bill left for the Senate to consider is the $10 million and hopefully the Senate can reach a decision before the end of next week, which means the special session should be ending soon.
He reminded senators that money to fund the $10 million is from the same revenue sources that were presented to the Senate early last year, with which the senators did not agree. He also said the administration has yet to submit the requested reports regarding these proposed tax and fee hikes that senators have been asking for since last year.
These increases will be a burden to the community especially the 40% of the local work force who earns $10,000 or less a year— and these are the ones who will be greatly impacted by any increase in taxes, said Gaoteote, who also noted that there has to be funding for LBJ.
Gaoteote recommended holding off any committee decision on this bill while awaiting financial reports from the governor’s office, which hopefully will arrive early next week.
Lualemaga quickly supported the recommendation and the committee members also were in concurrence.
In the meantime, the House Health/LBJ Hospital Committee meets today to hear government testimony on the $10 million. The committee is looking at calling on the private sector early next week.