House approves $3 MIL for LBJ — as a loan repaid with wage tax

After making several amendments to a Senate bill, the House approved yesterday in final reading the measure that provides for the LBJ Medical Center funding to the tune of $3 million, which is a loan to be repaid with a new 2% wage tax.

The bill now goes to the Senate, where senators will decide on whether or not to accept the amendments. If they do, the bill will then be registered and sent to the governor for his action but if not, a conference committee will be called for both chambers to iron out final language of the measure.

The original language of the Senate bill (S.B. 32-26) called for $3 million in supplemental funding for LBJ, who is moving to implement on Feb. 6 its rate hike. Funding source is the $4 million currently in the ASG Workmen’s Compensation Account.

Prior to the final vote yesterday, House Budget and Appropriations Committee chairman Rep. Vailiuama Steve Leasiolagi explained to his colleagues that the committee learned from the ASG Comptroller report that just over $4 million is in the Workmen’s Compensation Account.

He also explained that the ASG Tax Office manager Melvin Joseph had testified before the committee that the government collects about $4 million annually on the 2% wage tax.

According to the chairman, the committee agreed to amend the Senate version in which the $3 million from the Workmen’s Compensation Account for LBJ would be a loan and the new 2% wage tax— another amendment in the same Senate bill— will be used to repay this loan, which is interest free.

After the loan is paid off, the bill calls for 50% of the revenue to go into the LBJ coffers for the off-island medical referral program and the other 50% to the ASG general fund, to help the government meet its financial obligations moving forward.

Although the Senate had approved a separate bill calling for a new 2% wage tax with all  revenues earmarked for the hospital, Vailiuama said this 2% wage tax inserted in S.B. 32-26 is from the House version which remains pending in the House for approval.

Rep. Larry Sanitoa said he was hoping that 50% of revenues earned from this wage tax after the loan is paid off, would go directly to LBJ operations instead of being earmarked for special purposes within the hospital. He said one of the biggest challenges faced by LBJ, due to the failure of ASG in paying its subsidy in a timely manner, is matching funds for the Medicaid program. However, he said he remains supportive of funding for the cash-strapped hospital.

Also passed yesterday by the House in final reading was another Senate bill (S.B. 32-28), which allocates $800,000 for LBJ operations and another $800,000 for ASG matching funds for FEMA disaster projects.

Funding source for this measure comes from the ASG  surplus of $1.6 million in fiscal year 2011. However, the governor has said publicly this surplus does not exist because of a deficit from the previous fiscal year.

Prior to ending yesterday’s session, Rep. Tu’umolimoli S. Moliga asked House Speaker Savali Talavou Ale if the House leadership had received official confirmation from LBJ about the rate hike. He said this increase should be halted.

Savali said the official notice from the hospital was sent to the governor, with the hike to go into effect Feb. 6. Savali said he hopes that with yesterday’s action by the Fono, it will cause the board to change its mind about implementing the fee hikes.

He said he will be meeting soon with the Senate leaders for an official communication to  LBJ about the rate hike - but didn’t elaborate further.

LBJ board chairman Moananu Va in a Jan. 27 letter addressed to the governor, says that the hospital has no choice but to hike the rates or LBJ  will not be able to pay vendors or meet payroll on Feb. 22. Moananu said the rate hike has been delayed twice while there has been no solid financial aid package from the government despite several hearings. A copy of Moananu’s letter was sent to the Fono leadership.

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