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Senate president explains different LBJ funding bills

Senate President Gaoteote Tofau Palaie has disputed Gov. Togiola Tulafono’s claim that the Fono is holding off on approving administration bills, which would address financial needs of the LBJ Medical Center.

The hospital yesterday implemented the facility fee hikes.

Togiola’s claim was made on his weekend radio program and Gaoteote told senators yesterday that because of this statement by the governor, he has been asked by members of the Senate if any legislation from the administration is being put on hold by the Fono leadership — because there is no administration bill for the hospital pending in the Senate.

Gaoteote explained that the only measure received by his office was the $10 million proposal to be funded with increases in the import tax on alcohol and beer; the hike in annual business license fees, for which 65% of the fees collected will go to the referral program; the$2,000 corporate franchise tax; and the new wage tax of 4% (which is similar to the 2% wage tax that expired Dec. 31, 2011)

Gaoteote said the original proposal provided two different versions, both of which were sent to the Senate and the House, prompting his office to seek clarification from the governor’s office. 

He said he recently received the information or clarification that the proposed measure is meant to fund the LBJ off- island medical referral program.

Gaoteote said statements by the governor that the Fono is holding off on administration bills are (for sure) incorrect, and only one proposal has been provided by the governor. Gaoteote also reminded senators that the administration bill seeks to fund the referral program, while the hospital is looking for money to fund its operations, saying this is another problem with the governor’s statement on the radio program.

He said the Senate has done its work to address the urgent financial needs of the hospital by approving five separate pieces of legislation, which were sent to the House.

Two of the bills — which were approved last week by the House — would provide about $1.2 million in immediate funding for LBJ. According to Fono personnel, the bills were enrolled last Friday, and transmitted to the governor for review, and hopefully, approval.

Sen. Velega Savali Jr. said one of the issues here is whether there is money in the government’s coffer to assist the hospital, and right now there is. It is the $4 million available in the Workmen’s Compensation Account, which is the funding source of  S.B. 32-26 — which allocates $3 million to the hospital.

He recalled an earlier statement by Sen. Tulifua Tini Lam Yuen, who said that in time of crisis, money that is available should be used to help the hospital.

Velega also suggested that the Fono look into any money left in the $20 million loan ASG received more than two years ago from the ASG Employees Retirement Fund, to help finance hospital needs.

Sen. Alo Dr. Paul Stevenson said the question he asks is whether the Senate is fully aware of what’s happening financially at LBJ. He said the Fono allocated some $15 million five years ago for LBJ and where is that money? He suggested that the Senate and government get a full understanding of the actual financial picture for the hospital.

Sen. Galeai M. Tu’ufuli said he believes the problem with LBJ appears to be that the hospital “is unable to meet their financial obligations” due to the close to $2.8 million shortfall in ASG subsidies in the last fiscal year.

Galeai recalled that when this financial issue with LBJ first surfaced, the governor called for working together with the Fono, whose leadership immediately worked on a financial aid package that was submitted to the governor.

However, said Galeai, the governor quickly rejected the proposals. The Manu’a senator said a smart person would have used these proposals as a starting point to kick-start negotiations with the Fono on appropriate measures to help the hospital, but that didn’t happen at all.

He went on to say that the media has reported that the governor didn’t want to meet last Friday with hospital officials — and the governor announced on his radio program that he will dissolve the hospital authority if LBJ raises fees.

He said such a move to amend local statute on the hospital authority will end up in the Fono, and reminded the Senate that LBJ became an authority due to pressure from the federal government to resolve federal funding issues.

He said the LBJ board and the governor should have a much closer working relationship in order to identify these types of financial problems before they get worse.

Other senators also spoke about the fee hikes affecting the public.

Whatever is said now about the hospital's fee hikes, the main issue is that the hospital needs additional funds, said Gaoteote, who added that the Senate is in full support of helping the hospital, but what the governor is proposing in his bill, is only for the off-island medical referral program, not overall LBJ operations.

He said the hospital’s immediate need is a cash infusion, not a proposal which requires  collecting revenue later down the line from a tax.

Meanwhile, three members from the Senate and and three from the House will meet today in a conference committee to iron out the final language for S.B. 32-26.

The original version of the bill calls for a direct payment of $3 million from the funding source, the Workmen’s Compensation Account, to the hospital.

However, the House amended the bill to reflect that the $3 million be a loan, to be repaid by a new 2% wage tax. After the loan is paid off, 50% of revenues collected from the wage tax would go to LBJ’s off-island medical referral program and the other 50% goes into the ASG general fund.

The Senate insisted that the $3 million not be a loan but a direct payment to LBJ, who is in dire need of a quick cash-infusion.

Both sides hope the conferees will come up with a solution that will be agreed upon by both chambers.

In the meantime, there is no indication that if these bills are passed that the hospital will roll back its fees. The LBJ CEO has said in previous Fono hearings that the hospital authority is seeking a consistent source of income to pay its bills, in light of the inconsistency of the government subsidy.

He has also noted that the subsidy due from ASG is actually money that used to come directly to LBJ, as part of its Department of Interior (DOI) funding share, but was given to ASG in order to co-mingle with local funds, and then be given back to the hospital to pay its local Medicaid matching share, which cannot be paid with federal funds.