Am. Samoa Government Reviewing 2-Percent Wage Tax

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Federal sequestration prompts ‘reconsideration’

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, March 4, 2013) – Blaming federal funding in limbo over the budget sequestration and across-the-board federal budget cuts in affect since March 1, American Samoa Governor Lolo Matalasi Moliga's executive assistant Iulogologo Joseph Pereira said the administration will now be carefully reviewing the local 2% wage tax before deciding its next course of action.

"The governor has not addressed this issue yet but given the national circumstances, all our existing revenue streams will be assessed carefully," said Iulogologo via e-mail from the U.S. mainland last Friday as he, with Gov. Lolo and several American Samoa Government (ASG) officials are en route to Pago Pago after a stop in Honolulu for more meetings.

In his January address before the Fono, Gov. Lolo stated that his administration is "re-considering" the wage tax law, enacted last year as the revenue source to first pay off LBJ Medical Center’s $3 million loan from the Workmen’s Compensation Account and thereafter all revenues collected were to be earmarked for hospital operations.

Asked if Lolo had made a decision on the wage tax, Iulogologo replied, "With sequestration and the ordered 5% reduction by Interior Department (DOI) and the across the board cuts for all federal grants, the issue of the 2% tax will have to be considered carefully."

Some local lawmakers had also voiced concerns over the administration's possible repeal of the local wage tax which they say would leave even less money for the cash-strapped medical center.

ASG officials testified at the Fono in the early part of last year that the wage tax was expected to yield about $4 million annually and forecast the loan should be paid off by the end of 2012.

However, LBJ Hospital's FY 2013 first quarter performance report states, "we (LBJ) have been advised that although ASG was receiving the [wage] tax payments, no payments had yet to be made to the Workmen’s Compensation Account."

Asked if the executive office is aware of any problems collecting this wage tax to pay the loan, Iulogologo said, "If the salaries were paid, this money should have been collected."

In the same report LBJ stated they had taken the $1.25 million it was forecasting from the wage tax out of its FY 2013 budget, due to the uncertainty of this funding source — based on information from the Executive Branch.

"I don't understand why LBJ took it off their budget when the law is rather specific on the disbursement of the proceeds of the 2% tax," Iulogologo said.

He added that "from my personal perspective the LBJ board ought to take a serious look at the salaries paid to the management staff of the hospital."

When asked for comments, Iulogologo said he has not read the FY 2013 performance report and therefore, "I cannot respond intelligently to this issue" but promised to "certainly review this issue" upon his return to the territory before providing a thorough response.

Iulogologo said the issue of federal funding for healthcare services was raised with DOI, "however the situation in Washington DC is rather hectic hence all financial issues are being run through the microscope."

He noted the "issues of Medicaid and how we can maximize it was the topic of discussion with DOI" as well as with US Department of Health and Human Services (DHHS) officials.

Lolo had revealed during his January address to the Fono that his administration will re-evaluate Togiola's decision to opt out of the medical insurance exchange under the Obama Care Act because he believes there is additional funding under the exchange program that could come to the territory.

Iulogologo reported that during last week’s meeting in Washington DC, Lolo asked Congressman Faleomavaega Eni to assist in "requesting DHHS to reconsider our request for the option to let the Federal Government manage our exchange program…" if his administration "elects to reverse the decision by former Gov. Togiola Tulafono opting us out of the Insurance Exchange Program, under the Obama Care program."

"More money is made available under the Obama Care Act, however we are trying to find ways to ensure that every penny to which American Samoa can qualify will be pursued with vigor. Medicaid could be the best source of funding for LBJ and the Health Department," Iulogologo pointed out.

"The Obama Healthcare Act is complicated hence Governor Lolo upon his return home will review the applications received for the Medicaid Officer/Director," he said. The Medicaid Office, currently under the Governor’s Office, is headed by Niuatoa A. Puletasi, who has been American Samoa’s Medicaid officer for many years, including the time when the Medicaid Office was part of the LBJ hospital.

"The new person — hired as Medicaid Officer — will have to follow up on all issues connected with the Obama Healthcare Act to ensure that we receive all the funds accruing to the Territory," said Iulogologo.

LBJ is already estimating a loss of $1.35 million annually in federal Medicaid funding, because the number of "presumed eligibles" for Medicaid dropped from 87%of the population to 73% of the population, according to the hospital’s FY 2013 first quarter performance report.

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