New Jersey Non-Profit Hospitals Fear Future Loss of Tax Exemption Status

EAST BRUNSWICK, N.J. - Feb. 5, 2016 - PRLog -- Governor Christie's veto of New Jersey hospital tax exemption bill has caused fear and anxiety among many hospital owners. Many fear that the Governor’s recent veto of the bill could result in years of costly lawsuits.  The bill was drawn up after Morristown Medical Center's tax exemption status was revoked.

The state tax court claimed that the hospital operated like a for-profit business rather than a non-profit. The courts discovered that the hospitals paid out excessive salaries to its executives for profit-making purposes. They also found that they owned all stock shares in five private for-profit medical practices. Many non-profit hospitals are concerned that the same thing will eventually happen to them.

The veto is allowing hospital owners to maintain their tax exemptions. However, they must pay their municipalities $2.50 a day for each hospital bed. Plus, $250 a day for satellite emergency care facilities. Inflation will cause a 2% rise annually. The new law will allow municipalities to raise $21 million this year, according to the New Jersey Office of Legislative Services.

The Governor had until January 18th to sign the bill. However, he decided not to take action. This caused a pocket veto – forcing lawmakers to reintroduce the bill in the next session. Some people claim that Governor Christie didn’t sign the bill because of his presidential election. If he signed the bill, voters will consider this a tax increase. When the Governor's office was questioned regarding the bill, they did not comment on the bill. Instead, the Governor's spokesperson mentioned that the Legislature's vote was considered a hasty decision.

Another reason that triggered concern, regarding the tax exempt status, was when the Illinois Department of Revenue decided to cease from reviewing property tax exemption applications temporarily. Will New Jersey non-profit hospitals experience the same outcome? It is still too early to determine how things will turn out.  Meanwhile, non-profit hospital owners have their fingers crossed.

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