In landmark shift, hospitals agree to fees in lieu of property taxes
JANUARY 3, 2016, 10:59 PM LAST UPDATED: SUNDAY, JANUARY 3, 2016, 11:00 PM
BY LINDY WASHBURN
STAFF WRITER |
THE RECORD
For more than a century, New Jersey’s non-profit hospitals have been exempt from paying property taxes, despite relying on their communities to maintain local roads and provide police and fire protection. Now the state’s largest hospital association says its members are willing to make payments to towns they reside in — but many municipalities want more.
In a historic change, the New Jersey Hospital Association recently declared its support for a proposal in the Legislature to require non-profit hospitals to make “community service contributions” to municipalities. The move came after a tax court decision this summer that Morristown Medical Center was not entitled to its property-tax exemption because its operations were little different from those of a for-profit company. That hospital has since agreed to pay $15.5 million over 10 years.
Concerned that Judge Vito Bianco’s decision would lead to tax battles involving many other hospitals, the hospital association endorsed a proposal by state Senate President Stephen Sweeney. The measure would assess non-profit hospitals a fixed daily contribution — not a tax — of $2.50 per bed, to be used for public safety expenses or to reduce property taxes.
The association estimated that the payments from all of the state’s s would total $21 million to $25 million, including about $2.7 million annually from the six non-profits in Bergen and Passaic counties, if the measure is enacted as written. They are Hackensack University Medical Center; The Valley Hospital in Ridgewood; St. Joseph’s Healthcare System’s two hospitals in Paterson and Wayne; Englewood Hospital and Medical Center and Holy Name Medical Center in Teaneck. Hospitals owned by for-profit companies — HackensackUMC at Pascack Valley in Westwood and St. Mary’s General Hospital in Passaic — already pay property taxes.