Multimedia Todu Guam Articles Targets Banks, Insurers, Gaming; Investigation into Impropriety Now Ever-More Important

Sen. Dennis Rodriguez is proposing a net total of at least $53 million in annual additional funding for Guam Memorial Hospital to cover its operational shortfall and provide the capital needed to modernize and expand (or outright build or purchase) the hospital. He is asking Speaker BJ Cruz to report out the governor’s hospital funding bill, but not before some changes that Rodriguez offers to the Speaker in the form of a substitute bill.

 

“These are smart solutions we put together simply by listening to what people have to say,” Rodriguez said. “I told Adelup there are ways to solve these problems while limiting the pain that tax policy changes can often cause. We can’t just throw out the easiest math formula and say we’ve done our job, because oftentimes those ‘solutions’ hurt the greatest number of people in a big way.” The senator is referring to the proposal to increase the GRT by 50 percent, believing a GRT increase across the board will hurt too many working and poor families.

 

SIDENOTE: Rodriguez is separating the operational funding issue from the mismanagement investigation. “GMH and the employees no doubt need this money and the associated modernization. Let’s be clear about that. What they don’t need is abusive or corrupt management. We’ll get to the bottom of that separately, through a fair investigation. And that’s critical, because if we approve this measure, it means there will be millions more going to GMH. That makes the investigation into impropriety ever-more important to the public interest.”

 

The annual revenue increase will come from a 4-x-increase in the gaming assessment, a 4% assessment on insurance companies, and a rework of the governor’s Bill No. 230-34. That bill by and large would end tax holidays several industries have enjoyed for years, netting out an estimated $70 million in could-have-been revenue if these businesses paid the business privilege tax (BPT), or taxes on gross receipts (aka GRT) like every other kind of business. Starting with that $70 million figure and (netting out) the portions of the governor’s bill that the senator proposes to take out, and then adding the new provisions, this is how the math works:

 

Wholesalers, banks, hospitals, insurers $70,000,000

 

RODRIGUEZ CHANGES:

Net out wholesalers ($35,000,000)

Additional 16-cent/$1 gaming assessment $8,000,000

New assess. of 4% fee on insurers $10,000,000

 

Net total new revenue for 1 FY $53,000,000

 

NOTE: For history and context on these taxes and fees, especially the gaming tax, please refer to the attached letter from Rodriguez to the Public Auditor dated Sept. 8 last year. Part of the senator’s rationale for a steep increase in the gaming assessment is taken from his letter to Speaker Cruz (also attached) and follows: “Unlike the GRT, the gaming tax affects a single service that is disposable against the other items in the everyday household’s list of priority purchases. In other words, if we increase the GRT, the Legislature will be forcing a great number of people to pay more taxes, considering there aren’t many choices when it comes to the essentials in life. The tax on limited gaming affects a small industry and a narrower population that elects to play these games.” 

 

The decision to take wholesalers out of the discussion is based on an appreciation for and understanding of the purpose of the GRT and how the legislature never intended for consumers to be double taxed.

 

“This should have never been called an exemption for wholesalers to begin with,” Rodriguez said. “I think that’s where the confusion really comes from and why we’re always debating this issue of fairness decade after decade. The fairness question definitely applies to the banks and the insurers, but the wholesalers are an entirely different creature within the economy. I’m proposing that we write them out of the tax levy from the beginning of the BPT tax code by including their business activity in the list of transactions not considered ripe for BPT application.”

 

In his letter to the Speaker, the senator goes over the detail of the various tax changes. He also asks the Speaker that any funding authorization coming from the proceeds of the new revenue be strictly authorized for Guam Memorial Hospital’s operational shortfall and modernization  effort. 

 

“Too much is going on and with such a sudden turn of the fiscal story that we have been told the past few years. These uncertain times make it ever more critical that each and every senator stand guard at the vault to the people’s treasury. It is my humble belief that we must fix this hospital issue and provide to its staff the facilities and equipment they need to do the job they know they can accomplish for our people. I believe them and I believe in their commitment to excellence. Unfortunately, based on the events of the past few weeks, I cannot say I believe what their management or Adelup tells us.” - Letter to Speaker Cruz delivered this evening 

 

- end of release -

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