Senator proposes new fee to stop future lawsuits against tax-exempt NJ hospitals

New Jersey Sen. Paul Sarlo introduced legislation Thursday aimed at preventing future lawsuits against the state's 58 nonprofit hospitals over property taxes, according to NJ.com.

In June 2015, a tax court judge ruled Morristown (N.J.) Medical Center should not be exempt from property taxes as it failed to satisfy the legal test that it operated as a nonprofit, charitable organization for several tax years.

Since the judge's ruling, 41 towns in New Jersey have filed tax appeals against 35 hospitals in their local municipalities. 

To stop future lawsuits, Mr. Sarlo proposed legislation that would require the hospitals to pay their municipality a fee of $2.50 per day for each licensed bed they operate to keep tax-exempt status. The fee would rise 2 percent each year. The legislation would require 5 percent of the bed fee revenue to be used for public safety services, according to NJ.com.

"These hospitals have blanket tax-exempt status even though they have profit-making facilities," Mr. Sarlo said in a statement to NJ.com. "They should be helping pay their fair share to compensate for vital services, including homeland security, emergency response, snow removal and the myriad of municipal services."

New Jersey Hospital Association spokeswoman Kerry McKean Kelly told NJ.com, "We are glad to see there is some attention being paid to this issue." She said the NJHA is still reviewing the bill.

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