Gov. Chris Christie held a news conference at Trinitas Regional Medical Center in Elizabeth on Friday to announce his support for a two-year moratorium on property taxes for previously exempt nonprofit hospitals while an appointed commission studies the issue further.The plan would also place a freeze on pending litigation regarding the tax-exempt status of the state’s 62 nonprofit hospitals.
Legislators have been working on the issue since November, when Atlantic Health System agreed to pay Morristown $15 million to settle a tax case after the town sued the nonprofit hospital system to strip Morristown Medical Center of its tax-exempt status and make it pay for nearly a decade of back taxes.
A bill put forth late last year by the Legislature aiming to curb subsequent lawsuits was pocket-vetoed by Christie back in January.
That bill and other solutions that have since been proposed have been “uneven and patchwork, at best,” Christie said Friday.
“The subject of property tax exemptions is a complex issue that has not been comprehensively reviewed or legislatively modified in more than seven decades,” said Christie. “While I applaud the Legislature for taking quick action to address the urgent needs of these nonprofits, this is a matter that deserves more careful study from everyone who would be impacted and a thoughtful policy discussion.”
Christie said the review commission will be comprised of nine members, including the state treasurer, the commissioners from the state Health and Community Affairs departments, the state secretary of the Higher Education Commission, the director of the New Jersey Health Care Facilities Financing Authority and four other members to be appointed by the governor’s office.
Of Christie’s four appointees, one will be recommended by Senate President Steve Sweeney (D-West Deptford) and another by Assembly Speaker Vincent Prieto (D-Secaucus). The other two will feature a mayor of a municipality with a nonprofit, tax-exempt hospital and someone representing the interests of either a nonprofit hospital or tax-exempt institute of higher education.
While Christie said that Sweeney supports the plan, he noted that Prieto has yet to officially come on board.
Sweeney put out a statement Friday afternoon indicating that he still believes Christie should have signed the previous legislation put in front of him. He added that the two-year moratorium just freezes current conditions and that any “real solution will be delayed and municipalities will have to wait.”
“But the problem should not be ignored, because it will continue to leave municipalities and their taxpayers paying the price for inaction and the hospitals in a continued state of uncertainty,” Sweeney said. “If the governor and Speaker Prieto agree to support this plan, I will do the same in the Senate with the hope that it will lead to productive and workable solutions.”
Christie added that previously tax-exempt hospitals “need to know with certainty what their costs are going to be.”
New Jersey Hospital Association CEO and President Betsy Ryan applauded the move Friday.
“This approach allows our state to take a deep breath and work carefully and collaboratively to address the uncertainty created by the tax court decision on nonprofit hospitals’ tax exemptions,” said Ryan. “We thank Gov. Christie, Senate President Sweeney and the other legislators for crafting this reasonable approach to ‘stand down’ on litigation while the various stakeholders give thoughtful study to the matter. We also look forward to working with both the Senate and the Assembly on this approach and provide the certainty that hospitals, and municipalities, seek.”
State Sen. Robert Singer (R-Lakewood), who co-sponsored the bill that Christie pocket-vetoed, praised Friday’s announcement as a step in the right direction.
“The bipartisan agreement announced today will end the need for costly litigation between nonprofit hospitals and the communities they serve,” said Singer. “This agreement will afford us the time we need to conduct a proper review of the tax exemption law to find a solution that is fair to host municipalities without crippling the hospitals that serve them.”