Senate rejects both of Governor’s LBJ funding bills


The Senate yesterday rejected in second reading its version of two proposals from Gov.  Togiola Tulafono dealing with LBJ Medical Center and then went on a three-day recess to await the House decisions on the identical bills.

The first bill would dissolve the American Samoa Medical Center Authority, including its board of directors and the chief executive officer and transfer the hospital to the Executive Branch under the Department of Health.

The governor told a joint Fono meeting last week that he is looking at having an off-island company, owned by Samoans with experience in hospital management, take over management and operation of LBJ.

The second measure is a $10 million appropriation, to be funded with a hike in excise tax on beer, alcohol and tobacco; an increase in business license fees; a new $2,000 corporate franchise tax; and a new 4% wage tax.

There was call from at least two senators to postpone votes on both bills or at least keep them in committee for the time being, but Senate President Gaoteote Tofau Palaie pointed out that these measures were presented for the current special session and therefore the Senate must act on both measures. 

In the end, the majority of senators voted to reject both measures — which are still alive in the House.

With the bills rejected, the Senate has now completed its work for the special session, which also included rejection of the nomination of two board members to the LBJ board of directors.

(Samoa News notes that another LBJ bill proposed by the governor, the $8 million loan from the ASG Employees Retirement Fund, was rejected during the third regular session, by the Senate, and was therefore not on the floor for discussion during this special session.)

Gaoteote then announced that the Senate would now take a three-day recess and reconvene next Tuesday because there was no other work for the Senate to do at this time, except await the final decision by the House on the $10 million appropriation bill and the bill to dissolve the Medical Center Authority.

Current statute allows each chamber to recess for up to 3-days but more than that would require approval of both chambers.


Earlier yesterday morning the Senate Budget and Appropriations Committee, chaired by Sen. Lemanu Peleti Mauga, held a meeting to discuss the $10 million appropriation bill without any witnesses being called to testify.

Lemanu recalled for the committee that it was the wish of the majority of senators not to impose additional taxes on the public, and the reason funding sources —when they were first presented last year for another administration bill —were tabled in committee and have not moved forward.

He said that with this current $10 million bill, with the same funding sources, senators remain concerned about the additional burden on the community.

Sen. Lualemaga Faoa said the Senate should not rush into a final decision on the bill, adding that the government should provide an explanation of the proposed revenues to be collected from the funding source; noting that the Senate has received from the government the projected revenue amounts for review.

Sen. Alo Dr. Paul Stevenson, who also urged the Senate not to rush into a decision, says he has questions pertaining to tax exemptions given to corporations and there must be some information on how many have been given such exemptions.

He said the government should be asked as to how many corporation and businesses are paying the right taxes and how many are not doing their share for the ASG finances. He said these are just some of the questions which need to be answered in order for the Senate to get a clear picture of the government’s financial status.

Alo reminded senators that this financial issue with LBJ is not a new one and points out that over the last five years or so, a total of $15 million — in two separate loans — were provided to LBJ, whose board and management “is out of control” when it comes to operations of the hospital.

He said his heart goes out to the people who will carry the heavy burden if the new taxes are passed into law, but his heart also goes out to those people who need off-island medical attention, while there is no money in LBJ’s account.

Alo suggested that if the $10 million appropriation and the funding sources are too high, then maybe the Senate can look at reducing the amounts, or look at other options.

Sen. Mauga T. Asuega said the proposed taxes and fee hikes in the bill will surely have a big impact on the community and pointed out that there are other funding options to explore.

For example, the Senate still has not received any firm information from the administration on the total amount of government money held at off-island banks and there is still no word from the governor’s office on the interest earned by ASG as an investor for the undersea fiber optic cable project.

Mauga recalled his statements last week where he noted that the 2% wage tax to repay the $3 million loan for LBJ from the Workmen’s Compensation Account is available for the off-island referral program once the entire loan is paid off, which is something that can be done within a year. (ASG estimates to collect about $4 million annually in the 2% wage tax)

He said these are just some of the funds and options out there to help the hospital and “I do not support this bill.”

Sen. Avegalio Aigamaua asked his colleagues for caution and not to move too fast on this measure because of the impact it will have on local businesses. He recalled media reports of testimony before a House committee on Monday from the private sector, who opposed the bill. (See story in yesterday’s Samoa News edition)

Sen. Paogofie Fiaigoa pleaded with his colleagues to support the bill, while Sen. Velega Savali Jr. suggested tabling this proposal for another time.

Sen. Fuata Dr. Tagiilima Iatala said its easy to say “yes” and approve a bill but beyond that there is a heavy burden for the community to carry when it comes to taxes. For example, the proposed 4% wage tax — which would take money away from people who need to buy things such as clothes and shoes.

He said the public is already faced with another burden of the 2% wage tax, which does not have a sunset clause — meaning that it will go on forever, unless a bill is passed stopping it.


Comment Here