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Governor Christie Vetoes Bill to Tax For-Profit Functions in Non-Profit Hospitals

Non-profit hospitals in New Jersey have been scrambling to “defend” themselves against the state government, after Morristown Medical Center as found to be operating for-profit in most of it’s center, and thus was subject to property taxes. Eventually, the two parties settled for $15.5 million, but a lot of other hospitals are worried that they’ll be next, and a number of appeals are in motion at the moment.

The state legislature recently passed a bill to establish taxes for non-profit hospitals with have for-profit operations within their property, something that is apparently pretty common in the medical world. The problem is that, since the for-profit aspects operate under the same roof as the non-profit aspects of a given hospital, they aren’t’ subject to property taxes, and that’s simply not fair. They’re still making use of municipal services and therefore should be paying their fair share, even if that’s still less than a totally for-profit medical center.

But Governor Chris Christie vetoed that bill, and said he’s pushing for a two-year “freeze” on litigation related to the tax exempt status of hospitals in the state. He wants the state assembly to establish a commission to investigate the issue ad develop a system that works for all parties, and said that the bill he vetoed was “rushed.”

Response has been mixed. There are those, both in the legislature and among hospital administrators, who support the governor’s plan, with some of the latter arguing that the current handling of the situation has created an adversarial relationship between the state and the hospitals. Others in the legislature feel that the bill they presented was fair, and that the governor was mistaken in vetoing it. They argue that the problem needs to be addressed now, not later, and that all parties involved deserve clarity in developing a solution.