Central Ward Councilwoman Gayle Chaneyfield Jenkins announced today that she has requested two experts to appear before the Newark City Council on Feb. 23 at 10:30 a.m. to discuss the tax-exempt status of non-profit hospitals in New Jersey.
The experts are:
- Martin Allen, the tax lawyer who represented the Town of Morristown in its successful lawsuit against Morristown Medical Center in which the hospital agreed to pay $15.5 million in back taxes and penalties, plus annual property taxes of about $1 million a year from 2016 to 2025.
- Michael Darcy, the executive director of the New Jersey League of Municipalities, which has opposed legislation requiring non-profit hospitals to pay a “community service contribution.”
Chaneyfield Jenkins said she has also invited city Tax Assessor Romal Bullock and Business Administrator Jack Kelly to the Special Conference meeting to hear from the experts and participate in the conversation.
Newark has three major hospitals -- Saint Michael's Medical Center, Newark Beth Israel Medical Center and University Hospital -- but only one would be impacted by a change in the tax exempt status of non-profit hospitals.
The legislation, which had the support of the New Jersey Hospital Association, was pushed through the lame duck legislature, but pocket vetoed by Gov. Christie. The legislation was drafted in response to the Morristown ruling in an effort to avoid a rash of lawsuits from municipalities that are home to non-profit hospitals.
Chaneyfield Jenkins, who opposed the legislation, said she felt it was important to hear from the lawyer who worked on the Morristown case and better understand the League’s opposition to the legislation.
“The hospital lobby tried to shove a statewide solution down our throats during the lame duck session,” said Chaneyfield Jenkins. “The governor’s pocket veto bought us some time to explore this issue in depth to determine what’s in the best interest of our residents.
“This conference will allow us to hear whether a statewide solution as proposed was good for Newark or whether we should explore challenging the property tax exemptions of the non-profit hospitals within our borders,” Chaneyfield Jenkins said. “We’ll be in a better position to know what solution to support once we hear from the experts.”
The issue has major repercussions in Newark, which is home to three hospitals – University Hospital, Newark Beth Israel Medical Center and Saint Michael’s Medical Center. University Hospital, as a state-owned institution, was exempted from the legislation. Saint Michael’s is awaiting approval from the state to be purchased by Prime Healthcare Services, a for-profit company. If the sale is approved, Saint Michael’s would automatically lose their tax-exempt status and would begin paying property taxes.
Under the legislation that was pocket vetoed, non-profit hospitals would have paid a community service contribution of $2.50 per licensed bed per day. Under that formula, Newark Beth Israel, which has 596 licensed beds, would have paid Newark $516,000, which includes subtracting 5 percent that would have been paid to Essex County.