We will be posting the meme above on social media to clear misconceptions about the financing package we’re pursuing for Guam Memorial Hospital.
The Pacific Daily News repeatedly has reported that we are seeking $425 million in bonds for our GMH projects, and that we propose to pay these projects through tax increases. BOTH POINTS ARE UNTRUE and we repeatedly have clarified this.
Related to Sen. Rodriguez’s Bill 340 & the amendments we propose to include construction and modernization projects in the total financing package:
– We DO NOT seek $425 million in new debt
– We DO NOT propose new or increased taxes
As we illustrate in the meme above, Governor Calvo and hospital proponents ask the Legislature to expand Sen. Rodriguez’s bill for a total $170 million in bond proceeds, mainly for hospital capital improvement projects. This is the “Build it up” prong of the hospital’s 3-prong solutions program. The minor portion of this proposed financing package includes the $30 million in vendor payables (part of Sen. Rodriguez’s original bill) + $15 million for operational and capital cushion while construction of the 4-floor outpatient Z-wing happens.
Three major questions come at this point:
QUESTION: This always happens. How do we make sure this doesn’t happen again?
ANSWER: The secondary reason for building up GMH is the four centers the outpatient facility will house will generate the money GMH needs to sustain its annual operating costs. Translation: the outpatient services will make up for the bills the federal government isn’t paying for their programs. The federal underfunding of these programs (Medicare and Medicaid, with MIP related to the rate structure) is chiefly what causes GMH’s structural deficit.
QUESTION: Can we afford the debt service on the bond we issue?
ANSWER: Yes. The alternative is to not build the outpatient facility and not generate the revenue needed. That will mean continuing the GMH structural deficit and the bailout that needs to happen every two years. That’s far more expensive than debt service at a low interest rate.
QUESTION: So, where did that $425 million figure come from?
ANSWER: The PDN probably added unrelated figures together. When talking about this bond, we often call it a financing package. That’s because we propose to pursue two seemingly-unrelated financial activities in one bond issuance:
- The new debt of $170 million we need for the GMH programs; and
- The refinancing of $240 million in EXISTING debt so that we can lower the interest rate on these bonds. This will produce a remarkable savings for taxpayers.
– end of release –