Sen. Rodriguez doesn’t support governor’s repeal of tax exemptions to fund GMH

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Governor Calvo introduced what he called a bipartisan bill that would tax certain industries that have enjoyed the benefit of tax exemptions.

Guam – Senator Dennis Rodriguez Jr. issued release indicating that he is not in support of fully lifting tax exemptions for wholesalers, despite a press release from the governor’s office claiming Rodriguez supports the governor’s bill to repeal tax exemptions for wholesalers, banks and insurance companies.

Governor Eddie Calvo issued a press release Thursday saying he had worked with Speaker B.J. Cruz and Rodriguez on a bipartisan compromise to fund Guam Memorial Hospital subsidies and modernization projects.

The bill, which was introduced by the governor, proposes to repeal tax exemptions for the wholesale, banking and insurance industries to pay for these often-pushed improvements by Adelup. The governor’s release indicated GMH’s accreditation was in jeopardy without this funding.

On Friday, however, Senator Rodriguez issued a contradictory press release, which airs his concerns about both the assertion that GMH’s accreditation is in jeopardy and about the proposed repeal of tax exemptions for wholesalers.

Rodriguez wrote in his release that while he was indeed working on a bill to remove these exemptions, the Democrat lawmaker changed his mind “following many conversations and review of testimony.”

The Governor’s office then responded with another release this morning GMH Medical Director Dr. Vince Duenas as saying, We are all very surprised by Senator Rodriguez recent statement and change of heart. As Healthcare Chairman, he is very familiar with the issues facing GMH. The bill introduced, at the request of the Governor, was drafted by his office and is the exact same piece of legislation that he circulated and secured 6 cosponsors on.”

“It’s not that they’re a special class of business, but they form an industry that makes it possible for small businesses to stay competitive against the big corporate guys,” Sen. Rodriguez’s release stated.

The senator claims in his release that lifting these exemptions and requiring wholesalers to pay gross receipts tax on products they sell to retailers would be a double tax.

“What will happen is that the bigger stores that ship in their products directly will have a  100 percent tax advantage over the small stores that need wholesalers to source their products. We can say goodbye to ‘Buy Local,’ jobs, Guam-grown businesses, and the government revenue we’re ironically trying to raise if wholesalers are taxed at 4 percent,” he says.

Senator Rodriguez is calling an oversight hearing on GMH to “get to the bottom of this scare on accreditation.” Rodriguez says that this is the first time the administration has said that GMH accreditation is tied to its modernization.

“This news is coming out of nowhere in a very alarming way, and I’m concerned that the administration is using this effort to cushion the blow of bad news about accreditation,” Rodriguez says in his release.

READ FULL RELEASE FROM SENATOR RODRIGUEZ BELOW:

Rodriguez: Renovations important; but not at expense of babies, accreditation, and everyone’s livelihood

For immediate release, January 11, 2018

(Tamuning, Guam) Sen. Dennis Rodriguez thanks the administration for backing off its plans for a tax hike in its latest GMH funding bill. But information and events surrounding three major hospital issues all appearing in one day is raising concerns with him, the doctors who deliver babies at GMH, and with small businesses that may inadvertently be the victims of hasty tax policy revisions.

“Today we found out that the maternity ward project was killed again, the governor introduced a bill that hasn’t received the public discourse it needs, and suddenly there’s a threat of GMH losing accreditation,” Rodriguez said. “I’m concerned. I’m concerned about the impact of these decisions and whether better decisions could have been made with more information.”

These are the specifics of these three general areas of concern regarding what appear to be multiple GMH issues:

  • Following many conversations and review of testimony on the proposed deletion of the wholesale industry exemption, Sen. Rodriguez was working on removing wholesalers from his original draft bill to get rid of the exemptions from the payment of gross receipts taxes. 

“It’s not that they’re a special class of business, but they form an industry that makes it possible for small businesses to stay competitive against the big corporate guys. If we require wholesalers to pay taxes on gross receipts from retailers buying their products, then we take another 4% from the stores where we buy things, we’re going to be double taxed. It’s not just us consumers who will be hurt. What will happen is that the bigger stores that ship in their products directly will have a  100% tax advantage over the small stores that need wholesalers to source their products. We can say goodbye to Buy Local, jobs, Guam-grown businesses, and the government revenue we’re ironically trying to raise if wholesalers are taxed at 4%. Could we compromise with a much lower levy, say 0.5% or 1%? Maybe. That’s something I’m considering. But it’s better we get that answer from an independent financial analysis on this. I was in the middle of commissioning that study as early as tomorrow. I understand the need to work fast on this, but we had to do this right and we had to get more information from the industries affected. If we pass a wholesale tax levy in haste, we will be causing a world of hurt for our people.”

  • The introduction of this bill, seemingly done in haste, surpasses a nearly-four year old commitment to modernize one critical portion of the hospital – its maternity ward. The senator is wondering whether any thought was given to solutions for the failed maternity ward project in light of the attention given to full hospital modernization. 

“We can’t call it a full GMH modernization if the place where our babies are born isn’t modernized, too. I have so many questions about the sudden cancellation of this project. How in the world did we get to negotiations with the selected bank only to find out that what the bank wanted was something we couldn’t give? That’s either bad faith negotiating, or a bad RFP. Either way, it’s not the bank or the government suffering from these decisions. It’s the mothers, the babies, and the doctors and nurses. They all deserve answers and I intend to pursue those answers on their behalf.”

  • The Adelup news release on the GMH funding bill threatens the loss of GMH accreditation throughout it, receiving so much attention that it is its subhead. 

“There’s more information about GMH accreditation being under threat than there is about the GMH funding bill in this news release that’s supposed to be about the tax holidays. And this is the first time the administration is telling us that GMH accreditation is somehow tied to GMH modernization. If senators knew that, there is no way we would have allowed for a JCAHO inspection of GMH to happen without providing whatever help GMH needed and, I think I can speak for many if not all my colleagues, getting on our hands and knees and helping over there ourselves. This news is coming out of nowhere in a very alarming way, and I’m concerned that the administration is using this effort to cushion the blow of bad news about accreditation.”

Rodriguez to GMH: Tell it to us straight so that we know how to help

Rodriguez is calling an oversight hearing to get the details of these decisions. “I’m going to get to the bottom of this scare on accreditation, because something like this doesn’t come out of nowhere. If the threat of losing accreditation is real, then it means somewhere at GMH we have fallen below a standard of care when it comes to the health and safety of GMH’s patients and employees. I want to know exactly how. GMH needs to tell the Legislature these details so that my colleagues and I can help.”

– end of release –

READ RELEASE FROM GOVERNOR’S OFFICE BELOW:

In response to Sen. Dennis Rodriguez’s press release sent out earlier this evening, Dr. Vince Duenas sent the below response. Dr. Duenas, GMH Medical Director, is one of the doctors, nurses and GMH staff who have been meeting with island residents at village and organization meetings for the last half a year to discuss the challenges at the hospital.  Dr. Duenas’ statement follows:

“We are all very surprised by Senator Rodriguez recent statement and change of heart. As Healthcare Chairman, he is very familiar with the issues facing GMH. The bill introduced, at the request of the Governor, was drafted by his office and is the exact same piece of legislation that he circulated and secured 6 cosponsors on.

We remain hopeful that the good senator will follow through on his commitment and not abandon GMH and its employees during their greatest time of need. As difficult as this may be, it’s incumbent upon leaders to give the doctors and nurses at GMH the support they need. Both  lives and accreditation are at stake.

We encourage him to keep an open mind and remain courageous until public feedback can finally heard at a public hearing.”