Burlington County Times

Senate Panel Advances Bill To Make Nonprofit Hospitals Pay Fee To Host Towns, Counties

Burlington County Times — December 21, 2015

By David Levinsky, Staff writer

TRENTON —Legislation to require New Jersey's nonprofit hospitals to make payments in lieu of property taxes to their host municipalities and counties was advanced Monday by the Senate Budget and Appropriations Committee.

The panel voted to release the measure for a possible vote by the full Senate on the final day of the legislative session Jan. 11.

In order to become law, the Assembly also must approve it before the end of the session. Gov. Chris Christie also would have to agree to sign it.

The legislation, the Hospital Community Service Contribution Bill, would not change nonprofit hospitals' tax-exempt status, which dates back to 1913.

But it would require those nonprofit hospitals that also host for-profit operations to make so-called "community service contributions" equal to $2.50 per day for each hospital bed, or $250 a day for each facility providing satellite emergency care.

The charge for satellite emergency centers was amended down from $750 originally proposed.

Supporters of the legislation said it is needed to protect the state's 63 nonprofit hospitals in the wake of a June court settlement in which Atlantic Health agreed to pay some property taxes to Morristown, Morris County, based on the value of its nonprofit hospital, Morristown Medical Center.

State Sen. Robert Singer, who sponsored the bill with Sens. Stephen Sweeney, D-3rd of West Deptford, and Joseph Vitale, D-19th of Woodbridge, estimated that nonprofit hospitals are in danger of being assessed about $110 million in property taxes if the state's property tax exemption isn't clarified.

"This legislation must get on the governor's desk before the legislative session ends," said Singer, R-30th of Lakewood. "This is saving our hospitals in the state of New Jersey. This is the salvation of health care in our state."

Opponents of the measure, including representatives from the New Jersey League of Municipalities and health policy advocate New Jersey Citizen Action, said they were concerned the bill was being rushed and does not address the central issue of the intermingling of for-profit and nonprofit activities at hospitals.

Michael Cerra, assistant director of the New Jersey State League of Municipalities, said some host municipalities were concerned the proposed service fees were inadequate and fail to achieve "tax equity" for other property taxpayers.

"Your tax exemption may be my tax increase," Cerra said. "This is not a money grab. The question is to what extent taxpayers will be forced to subsidize (hospitals)."

Burlington County is home to three nonprofit acute-care hospitals that potentially would be impacted by the law: Virtua Memorial in Mount Holly, Virtua Marlton in Evesham, and Lourdes Medical Center of Burlington County in Willingboro. Lourdes also operates a satellite emergency department at the Deborah Heart and Lung Center in Pemberton Township.

Under the bill's proposed formula, Virtua could be required to pay as much as $349,487 to Mount Holly for hosting Virtua Memorial and $180,675 to Evesham for hosting Virtua Marlton.

Lourdes Health Services could have to pay $157,862 to Willingboro and $91,250 to Pemberton Township.

The legislation would require 5 percent of the total payment to go to the county where the hospitals or satellite ER are located. Under the formula, Burlington County would stand to receive about $48,000.

All payments would be dedicated to either property tax relief or for police, fire and emergency services.

Hospitals would be able to deduct any voluntary community contributions they make from their payments, and hospitals losing money would be permitted to apply for an exemption from the payments.

The bill also would establish a study commission to evaluate the new payment system and make recommendations on possible improvements, including fee increases.

Cerra said the fee should be tied to inflation.

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