New Jersey hospitals fear that Gov. Chris Christie's veto of a bill mandating that not-for-profit hospitals contribute to local municipalities instead of paying property taxes could lead to years of expensive legal action.
They hope to create new legislation that will have a better chance of passing in coming months, and in turn avoid more lawsuits involving municipalities looking to pursue property taxes from local hospitals.
Betsy Ryan, CEO of the New Jersey Hospital Association, said if everyone can't come together on new legislation, “We'll see … years and years of costly litigation.”
The veto represented yet another setback for not-for-profit hospitals, which are coming under increased scrutiny nationwide for their property tax exemptions.
The bill was drafted after a state tax court in June pulled Morristown (N.J.) Medical Center's property tax exemption, saying it operated in many ways like a for-profit business. The hospital ended up settling with the city for $26 million, but the judge's ruling worried other not-for-profit hospitals in the state.
The bill Christie vetoed would have allowed hospitals to keep their tax exemptions as long as they paid their municipalities $2.50 a day for each hospital bed and $250 a day for satellite emergency-care facilities.
Christie spokeswoman Joelle Farrell said the governor's office is not commenting on specific bills, but in a statement on the lame-duck session in which the bill was passed, she said the Legislature's votes were “hasty” and that lawmakers had hoped for them to be “rubber-stamped.”
Some have speculated that Christie didn't sign the bill because it could be construed by some—amid his bid for the presidency—as a tax increase. But Michael Darcy, executive director of the New Jersey State League of Municipalities, which opposed the bill, agreed that the legislation was rushed. He said stakeholders need to now work on a “rational approach” to dealing with the issue. He said any fees paid by hospitals to municipalities should be “substantiated.”
