By Briana Vannozzi
Correspondent
For more than 100 years pop-profit hospitals have been exempt from property taxes because they provide overall benefits to their host communities. A landmark tax court ruling challenge that law last year. It found that Morristown Medical Center With a clock ticking down the hours until a pocket veto would automatically kick in, lawmakers worry they’ll have to restart the whole legislative process and non-profit hospitals worry municipalities will expect them to pay property taxes until a law is in effect. That’s what bill co-sponsor, Sen. Bob Singer has been trying to avoid.
“If we hadn’t passed the bill the alternative would be the assessors throughout the state would start assessing hospitals. The estimate would have been anywhere from $110 to $140 million in a tax bill for hospitals throughout the state which very, very honestly would have closed many hospitals,” Singer said.
For more than 100 years, non-profit hospitals have been exempt from property taxes because they provide overall benefits to their host communities. But a landmark tax court ruling challenged that law last year. It found that Morristown Medical Center — like many other non-profits — had too many for-profit operations mixed into its system, making it subject to property taxes.
“It’s similar to a PILOT,” said Sen. Bob Singer, the bill’s co-sponsor, “They’ll be paying for services they feel they do use in the town like police, EMTs, fire and giving 2 percent to counties to offset some of their expenses and being good corporate neighbors.”
All but nine of New Jersey’s 72 acute care hospitals are not-for-profit and could face retroactive property tax bills. Five percent of the payments will be sent to the county where the hospital is located, any voluntary contributions would be deducted from their annual payment and facilities losing money will be able to apply for an exemption.
“They’ll be paying $2.50 per bed, per day whether it’s used or not. That’s about $9,000 to $10,000 per bed per year, municipalities will be able to count on that. They can put it in their budget and there’s a 2 percent raise each year to account for inflation,” said Singer.
But some critics, like Newark Councilwoman Gayle Chaneyfield Jenkins, question if the payments — or community contributions as they’re called — are too lenient on hospitals.
“I’d like to see a study done, a thorough investigation through an independent accounting firm, to look at how much of the hospital is actually utilized for-profit how much is not-for-profit and then come up with an assessment that way,” Jenkins said.
A statement from New Jersey Hospital Association’s President and CEO Betsy Ryan supported the blanket policy: “…The Morristown tax court decision had created a great deal of uncertainty, for hospitals and municipalities alike. Our goal was to support a statewide solution that would strike a fair balance between hospitals and municipalities and allow them to carry on together in their shared goal of community health, safety and well-being.”
“This is a critical bill that if not signed would absolutely be a tax on hospitals, would absolutely be a tax on people,” Singer said.
The bill also creates a commission to study and make recommendations about the contribution system. Lawmakers said today they had no indication from the governor’s office if he’d sign it in time, or if hospitals and their towns will be hanging in limbo.