Senate OKs $2MIL for LBJ from Retirement fund refinance
The Senate yesterday approved in final reading Senate bill (S.B. 32-38) seeking to refinance $2 million under the $20 million loan from the ASG Employees Retirement Fund for LBJ Medical Center operations, but rejected an administration bill seeking an $8 million loan from the retirement fund — also for the hospital.
After its passage, S.B. 32-38 was quickly transmitted to the House where it went through first reading. The House has it own version of the $2 million refinance loan bill (H.B. 32-35) sponsored by Reps.Vailiuama Steve Leasiolagi and Pulelei’ite Tufele Jr.
The two bills were both introduced on Monday and passage was expedited this week because the current session officially ends tomorrow.
The House committee will meet today to discuss the S.B. 32-38. The only major difference between the Senate and House bills is that the House version calls for an increase on the import tax on cigarettes, beer and alcohol, including ready to drink beverages containing alcohol to fund the refinancing; the Senate bill does not.
As for the $8 million loan bill, Sen. Paogofie Fiaigoa moved to table the bill after the Senate Budget Committee recommended it be rejected. Paogofie said that it’s a very important piece of legislation to help the hospital; however, no one seconded Paogofie’s motion and in the final vote, the bill was rejected.
The Senate action on both the $2 million refinancing and the $8 million legislation came after a Senate Budget and Appropriations Committee hearing earlier in the day where Retirement Fund board chairman Aleki Sene Sr. and Retirement Office executive director Filisouaiga Ta’afua were called to testify.
Committee chairman Sen. Lemanu Peleti Mauga informed the witnesses that they were scheduled to appear in the committee to testify on the $8 million loan bill but since then, the $2 million refinance bill had been introduced in the Senate and would be included as part of the committee hearing.
Regarding the $8 million loan, Sene reiterated statements he made last week during a House hearing, saying that the retirement board does not support the bill due to the current language which is in conflict with other provisions of the law as well as current provisions of the $20 million loan law.
Another concern of the board is that this loan does not include in the language of the bill the interest rate and term of the loan; therefore the board cannot request an actuary report on the impact of such loan, he said.
Additionally, the board is concerned over the collateral for this loan as well as repayment of this loan. He also said that at this point ASG can only loan up to $6.7 million.
While he has not reviewed the language of the S.B. 32-38, Sene told senators that he has received word about a $2 million refinance bill in the House and on Tuesday the board met and agreed to this House bill. He said the board has also requested and received an actuary report from off-island to help with its decision.
Responding to committee questions, Sene said there are currently two government loans with the Retirement Fund — the first $10 million loan in 2006 for LBJ — being repaid by the American Samoa TeleCommunications Authority and the second one is the $20 million loan, which is repaid by certain ASG revenues, and is guaranteed by ASG assets.
Additionally, current balance of the $10 million loan stands at $7.5 million while the $20 million balance is $13.2 million.
And if the $2 million is refinanced, he said the additional monthly payment will be $35,000 to be added to the currently monthly payment of $272,000 for the $20 million loan.
In the meantime, the $10 million bill for the LBJ Medical Center off-island referral program has not been introduced in the Senate, while it has been in the House and is in committee. With the current Fono session set to end tomorrow, Samoa News understands the bill will not reach the Senate floor.