-- In an effort to fend off the multiple legal challenges nonprofit hospitals are facing over their tax-free status, Gov.
on Friday announced he will push for "a freeze" on all litigation from towns for the next two years until a new commission finds a solution.
Christie's remedy must be reduced to legislation that must pass both houses of the legislature, however, and Senate and Assembly leaders said they did not agree a two-year delay was warranted.
The governor's announcement addresses last year's precedent-setting tax court ruling and settlement requiring Morristown Medical Center to pay Morristown $15.5 million in lieu of property taxes.
The ruling has sparked a burst of tax appeals from more than a dozen municipalities. Like Morristown, these communities appealed the nonprofit status of the hospitals, hoping for a similar windfall to mitigate their own budget woes.
The study commission will examine the modern-day efficacy of the 70-year-old statute on tax-exempt institutions and how nonprofit hospitals operate, and recommend legislation on how to proceed, the governor said during a press conference at Trinitas Regional Medical Center.
"The time has come to create a legislative fix," Christie said. "We shouldn't rely on judges interpreting 70-year statutes.
"By passing this statute, it tells the courts they are not permitted to move ahead and no litigation could be filed until 2018," Christie said.
The legislature passed a bill last session that would have imposed a $2.50 per day hospital bed fee and a $250 per day fee for each satellite emergency care facility. Fees would have risen 2 percent annually to cover inflationary costs.
Christie declined to sign the bill into law and it expired at the end of the session, Jan. 11. At a press conference earlier this month, Christie said he rejected the bill because lawmakers had rushed it through. He said he was working on his own solution but declined to tip his hand.
The nine-member study commission, with seven members appointed by the administration and a member each from the Senate and Assembly, will chart the direction the state should take on behalf of New Jersey's 62 nonprofit hospitals, the governor said.
Christie said the proposal has the support of state Senate President Stephen Sweeney (D-Gloucester), who was not present at the event.
Sweeney said he would go along if Christie and state Assembly Speaker Vincent Prieto (D-Hudson) agree on the plan but chided Christie for not signing the bill lawmakers sent to him.
"I continue to believe that the governor should have enacted the legislation the Legislature sent him that would have nonprofits make community payments to their host municipalities to compensate them for the blanket tax exemptions on their properties, Sweeney said. "It was a fair and reasonable plan to have hospitals that are engaged in profitable practices pay their fair share for municipal services."
Prieto said he doesn't favor Christie's idea.
"We need to resolve this issue now, not in two years. The Assembly will continue working with all parties on an immediate solution," Prieto said in a statement. "Municipalities, hospitals and taxpayers deserve clarity sooner rather than later."
State Sen. Robert Singer (R-Ocean), one of the sponsors of the bill Christie vetoed, expressed his support for the governor's proposal. "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," he said.
Kevin Slavin, president and CEO at St. Joseph's Regional Medical Center, thanked the governor for creating "a way to go that will bring certainty to an issue that requires some thoughtfulness."
"Taxing not-for-profit hospitals has created a great deal of uncertainty and stress," said Slavin, who also spoke on behalf of the New Jersey Hospital Association. "We exist to care for our communities, quite frankly. It's created a lot of adversarial situations. We would rather be working together."
State Tax Court Judge Vito Bianco wrote that Morristown Medical Center appears functionally similar to for-profit hospitals, operating as "labyrinthine corporate structures, intertwined with both non-profit and for-profit subsidiaries and unaffiliated corporate entities."
His decision questioned the tax-exempt status of all nonprofit hospitals that operate in a similar fashion.
The tax appeals involve:
- New Brunswick vs. Robert Wood Johnson University Hospital;
- Freehold vs. Centrastate Medical Center;
- Summit vs. Overlook Hospital;
- Belleville vs. Clara Maass Medical Center;
- Raritan Township vs. Hunterdon Medical Center;
- Long Branch vs. Monmouth Medical Center;
- Rahway vs. Robert Wood Johnson University Hospital;
- Newark vs. Newark Beth Israel Medical Center;
- Livingston vs. St. Barnabas Medical Center;
- Long Branch vs. Monmouth Medical Center;
- Pequannock vs. Medical Center;
- Red Bank vs. Riverview Medical Center;
- Holmdel vs. Bayshore Community Hospital;
- West Orange vs. Barnabas Health;
- North Bergen vs. Palisades Medical Center.
Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.