Christie vetoes hospital tax bill
Michael L. Diamond
@mdiamondapp
Gov. Chris Christie Tuesday vetoed a bill that would have spared hospitals from paying property taxes and forced them to make a smaller contribution instead.
The move leaves in jeopardy hospitals' long-standing tax-exempt status and allows towns to pursue property taxes from local hospitals.
"We are disappointed with the pocket veto," Betsy Ryan, president of the New Jersey Hospital Association, a trade group, said. The association "along with its hospital members and both houses of the Legislature firmly believed the bill provided a consistent statewide approach for hospitals to support their host municipalities with added community contributions.
Now that the bill has been vetoed, we will work to present a constructive and refined approach that will provide certainty to hospitals and municipalities while addressing any concerns the governor may have," she said.
Should hospitals pay property taxes?
Lawmakers passed the bill in response to a decision last summer by a state Tax Court judge who ruled Morristown Medical Center had evolved over the years to include for-profit operations and should have paid Morristown property taxes. The hospital eventually agreed to pay the town $15.5 million and annual tax payments of $1.05 million through 2025.
Hospitals have been tax-exempt since 1913, when they where charitable centers that provided free medical treatment for the poor.
As assessors in other towns including Freehold Township began to pursue property taxes, state lawmakers appeared to head them off by passing a bill that would have charged hospitals $2.50 a day per acute-care bed and $250 a day for each facility providing satellite emergency care.
Martin Allen, an attorney who represents Freehold Township, Long Branch and a handful of other towns that are home to hospitals, said Christie's veto could help municipalities ease some of the burden on taxpayers.
"The amount of the community service fee (in the bill) had no rational basis," Allen said. "No one was able to come up with why the bill contained $2.50 per bed per day versus any other sum. Why did the bill have $250 per day for emergency care standalone? There was no rational or reasonable basis for those numbers."
"Our tax system is...a value-based. We're able to predict what we pay in taxes based on what our properties are valued at," he said. "This would have taken away from both the municipality and the taxpayer and say, 'We're going to treat hospitals differently."
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Using that formula, Shore-area towns would have received a wide range of revenue. Stafford, for example, would have received $169,725 from 186-bed Southern Ocean Medical Center, while Neptune would have received $586,737 from the 643-bed Jersey Shore University Medical Center.
Christie pocket-vetoed the bill, meaning lawmakers will have to introduce it again in the next session.
"It's not a perfect bill by any means at all, but hospitals are some of our largest employers in the state, and we don't want to put them out of business, either," Sen. President Stephen Sweeney, D-Gloucester, said during an editorial board meeting Tuesday with the Asbury Park Press. "And the fact that the state provides a lot of funding to the hospitals, to me, that if I'm taking the money that I'm giving to the hospitals and just putting it into the towns, I might as well just give it to the towns. What's the sense of doing that?"
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Michael Symons contributed to this story. Michael L. Diamond; 732-643-4038; mdiamond@gannettnj.com