Gov seeking $8 Million loan from retirement fund for LBJ

To “alleviate severe” cash shortfall at LBJ Medical Center, Gov. Togiola Tulafono is seeking Fono approval to authorize the American Samoa Government to enter into a loan agreement with the ASG Employees Retirement Fund (ASGERF) for the amount of $8 million.

This loan is in order to assist the hospital “to meet the critical health care needs of our territory’s residents,” said the governor in a Feb. 9 letter to the Fono leadership, adding that the issue of the medical center authority’s “financial crisis has reached grave proportions.”

In a recent meeting with the ASGERF board and staff, Togiola said he was informed that ASG has paid down its obligations by approximately $8 million and the amount of the loan in this proposal is limited to $8 million.

This previous loan referred to by the governor was the $20 million loan enacted into law in 2007 and amended in 2008 with the funding source coming from a certain percentage of current excise tax on beer, alcohol and cigarettes and the $5 fee on the Customs Declaration Entry Form.  The loan was to fund ASG capital improvement projects, which included the new tug boat, airport hangar, Fono Building, undersea fiber optic cable, and the 10th Festival of  Pacific Arts in 2008.

For the latest $8 million loan, the governor said the money “would go a long way toward alleviating the severe shortfall of cash that our hospital is currently experiencing”.

“By authorizing this loan, ASG will be in a much better position to assist our territory’s only hospital to meet the health care needs of our people,” he said.

According to the governor, the sources of funding for this proposal are identical to the funding sources that his administration submitted during the First Session of the 32nd Legislature in early 2011 in order to deal with ASG’s own revenue shortfall.

The governor is referring to the hike in excise tax on beer, alcohol, cigarettes, and tobacco; an increase in business license fees; the new $2,000 corporate tax and the new 4% wage tax. These are the same funding sources proposed by the governor in his $10 million measure to fund the LBJ’s off island medical referral program.

Neither the $8 million proposal nor the $10 million measure have been introduced yet in the Fono, so it’s unclear if the Fono will raise with the governor’s office the point that these two sets of proposals are to be funded from the same source.

The governor did note in his letter to the Fono that due to the urgency of this $8 million loan, his “staff is available to discuss any clarification and/or explanations required by this proposal and to develop further any and all funding sources for inclusion.”

Aimed at assisting the medical center during this time of financial crisis, Togiola said he is “re-prioritizing our needs based on the financial crisis that has presented itself” at LBJ “and consequently, all of the people of American Samoa.”

He urged the Fono to support the speedy passage of this bill and looks forward to working with the Fono to resolve the ongoing financial crisis at the only medical center in the territory.

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