NJ bill approved to 'tax' nonprofit hospitals: 5 things to know

A bill requiring nonprofit New Jersey hospitals to pay a fee for municipal services won legislative approval Monday and heads to Gov. Chris Christie (R) for approval, according to an NJ.com report.

Here are five things to know about the Hospital Community Service Contribution bill.

1. If the bill is signed into law by Gov. Christie, it would require nonprofit hospitals to pay fees rather than full-out property taxes. Hospitals would pay their municipalities $2.50 per bed per day and $250 per day per satellite emergency facility, according to the report. These fees would go up 2 percent each year for inflation.

2. Most of the state's hospitals — about 85 percent — are nonprofit and do not pay property taxes, though they rely heavily on police, fire and other public services. According to the report, industry consolidation and outpatient service trends have increased demand for these services.

3. The bill comes in response to a lawsuit challenging Morristown (N.J.) Medical Center's tax exemption status. The 687-bed hospital lost the case and the ruling found it operated largely as a for-profit entity. The hospital agreed to pay $15.5 million in property taxes due to ambiguity between its nonprofit and for-profit businesses.

4. Lawmakers and hospital executives developed the Hospital Community Service Contribution bill as a way to address the issue. Proponents of the bill say it will help hospitals retain their tax-exempt status, protecting them from significant taxes, while still making them contribute financially to the community services they need, according to the report.

5. Critics are calling the bill a "clear giveaway to the hospital lobby," according to NJ.com. Those who oppose the bill say it will shortchange cities that host nonprofit hospitals, according to the report.

 

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