Government

Newark Councilwoman Opposes Senate Bill Requiring Hospitals to Pay Community Service Contributions

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Newark Central Ward Councilwoman Gayle Chaneyfield Jenkins today said she opposed a Senate bill that would require hospitals to pay a “community service contribution” on that grounds that it would shortchange Newark.

Chaneyfield Jenkins praised the bill’s sponsor, Sen. President Stephen M. Sweeney, for proposing the legislative fix, but said the bill in its current form does not provide enough tax relief to communities like Newark.

“I want to commend Senate President Sweeney for taking the lead on this issue of great importance to cities like Newark that have so-called non-profit hospitals in their community, which have not been paying their fair share of property taxes,” Chaneyfield Jenkins said. “I recognize this is a complex issue, but the legislative solution in its current form only benefits the hospitals and doesn’t provide the fiscal benefits that cities like Newark should receive.”

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The legislation, S-3299, was proposed in response to tax court decision over the summer that found that Morristown Medical Center was not entitled to its property-tax exemption because its operations were little different from those of a for-profit company. That hospital has since agreed to pay $15.5 million over 10 years.

“The Morristown case clearly showed that non profit hospitals have not been paying their fair share of property taxes to their host communities,” Chaneyfield Jenkins said. “If we look, I'm sure we are going to find just like they did in Morristown that there are many aspects of our nonprofit hospitals that should not be tax exempt."

The legislation allows non-profit hospitals to continue their property tax-exemption, but calls for them to pay their host municipality a “community service contribution” of $2.50 per day per licensed bed. The New Jersey Hospital Association, the lobbyists for hospitals in the state, supports the measure.

A fiscal statement released on Dec. 24 by the state Office of Legislative Services estimated that hospitals throughout the state would pay about $20.1 million annually in host fees to communities throughout the state in the first year.

While OLS did not calculate figures for each municipality, Chaneyfield Jenkins said based on the formula, Newark would receive approximately $516,000 from Newark Beth Israel Medical Center, which is licensed for 596 beds and $310,000 from Saint Michael’s Medical Center, which is licensed for 358 beds.

Saint Michael’s is awaiting state approval to be purchased by Prime Healthcare Services, a for-profit company. If the sale is approved, Saint Michael’s would lose its tax-exempt status and be required to pay property taxes on the full assessment of the hospital, which would likely be higher that its community service contribution.

Newark’s other hospital, University Hospital, is state owned and exempt from the fees under the legislation.

Chaneyfield Jenkins has proposed a task force to review how much nonprofit hospitals would pay if their for-profit activities were to be assessed for the purposes of paying property taxes. Chaneyfield Jenkins is awaiting the legislative outcome before continuing with her proposal.

Chaneyfield Jenkins noted that 77 percent of the properties in Newark are tax exempt, which adds to the property tax burden of the city’s residents.

“My job on the City Council is to look out for the taxpayers,” Chaneyfield Jenkins said. “I cannot in good conscience sit back and not speak out about a bill that is not a good deal for the taxpayers of this city.”

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