Bipartisan legislation sponsored by Senator Robert Singer that would have nonprofit hospitals with for-profit facilities make payments to host municipalities to compensate for blanket tax exemptions on their property was approved by the Senate today. The bill, S-3299, also sponsored by Senate President Steve Sweeney and Senator Joe Vitale, would update tax laws that date back to 1913, would have acute-care hospitals make payments to their home communities to offset the cost of local services.
Sen. Robert Singer’s legislation would have nonprofit hospitals with for-profit facilities make payments to host municipalities to compensate for property tax exemptions. (Flickr)
“In the wake of the tax ruling against Morristown Medical Center we are on the precipice of seeing non-profit hospitals across this state hit with significant tax bills that will certainly lead to layoffs and even hospital closures,” said Senator Singer (R-Monmouth, Ocean). “We can’t afford to let this happen to an industry we rely on both for quality community care and as a local economic engine that employs approximately 140,000 workers. This community payment plan establishes a clear and predictable system by which hospitals can retain their tax-exempt status and have the stability needed in order to plan for long term investments in our communities while fairly paying for their share of the local services they rely on.”
“This is a reasonable and responsible way to have hospitals pay their fair share to their local communities while still recognizing their tax-exempt status,” said Senator Sweeney. “The health care industry has evolved and changed over the years but they continue to play an important role as employers and health care providers.”
“The acute care hospitals provide a wide range of valuable health care services to their home communities and to the residents of New Jersey,” said Senator Vitale. “Providing them with a payment formula that sets a reasonable schedule ensures predictability and consistency for the hospitals and their host municipalities so they can continue to best serve their needs.”
The legislation, entitled the Hospital Community Service Contribution Bill, would have non-profit hospitals that have for-profit operations make Community Service Contributions directly to their municipalities. The payment formula would be $2.50 per day for each acute care hospital bed and $250 per day for each facility providing Satellite Emergency Care.
The municipal payments would be dedicated to property tax relief and for public safety, such as police, fire and emergency services. Five percent of the payments would be sent to the county where the hospital is located, according to the bill.
Any voluntary contributions by the hospitals would be deducted from the community service payments and any hospital that is losing money could apply for an exemption from the payments.
The bill was amended to add an inflation clause, increasing the assessment by 2 percent annually and to revise the exemption clause for hospitals in danger of bankruptcy or close to violating their bond covenants by allowing the finances of a hospital system, rather than an individual hospital, to be considered when exemptions are decided.
The legislation would also establish the Nonprofit Hospital Community Service Contribution Study Commission to evaluate the success of the new system and make recommendations for any needed improvements.