As some municipalities begin a legal push challenging the tax-exempt status of local nonprofit hospitals, legislators and hospitals say they’re waiting for guidance from Gov. Chris Christie. Christie pocket-vetoed a bipartisan bill last session that would have let nonprofit hospitals that conduct some for-profit medical activities make annual community contributions and still maintain a tax-exempt status. The bill’s sponsors, as well as the New Jersey Hospital Association and New Jersey State League of Municipalities, say the governor has yet to explain his reasoning for the veto or what he would like to see included in revised legislation. NJHA supported the bill, while the League argued that there were potential constitutional issues with the legislation and that the proposed payments might not be high enough. In the meantime, at least seven municipalities have filed complaints regarding omitted tax assessments from area nonprofit hospitals for 2014 and 2015 with the Tax Court of New Jersey.
In July, Tax Court Judge Vito Bianco ruled that most of Morristown Medical Center’s campus did not qualify for tax-exempt status from 2006 to 2008 because of for-profit activities, particularly the use of the facilities by physicians who were in private practice and generated income from seeing patients at the hospital. In November, the hospital reached a $26.5 million settlement with Morristown. Singer said he hoped the governor would issue an executive order to stay the Morristown decision while a legislative solution continues to be worked out. Senate President Stephen Sweeney, another sponsor of the bill, said he will work to “advance a new bill as soon as we can.” On Tuesday, the Newark Municipal Council invited Martin Allen, special counsel for the town of Morristown, to present information on the case at a public hearing as council members sought to explore the potential implications of the ruling for Newark-area hospitals. Following the meeting, Allen told POLTICO New Jersey he has filed complaints for omitted tax assessments for 2014 and 2015 for seven municipalities.
A spokesperson for CentraState said the hospital already pays $1.7 million in total annual property taxes to Freehold Township. A spokesperson for Atlantic Health System, which includes Overlook, said the hospital doesn’t comment on pending litigation. The other hospitals did not immediately respond to requests for comment. Michael Darcy, executive director of the New Jersey State League of Municipalities, said it makes sense that certain municipalities are going to Tax Court at the same time that a legislative solution is being drafted, because it’s “anybody’s guess” which “path is going to work faster.”
This was big news. While only 100 yards long, the Anderson Street Bridge, which joins 84,000 residents of Hackensack and Teaneck, was partly shut four years ago after inspectors found too many rotted beams. Traffic was squeezed from four lanes to two. Buses and large trucks were banned entirely. But these latest repairs are just a temporary salve. A permanent fix to restore the bridge to what it once was and keep the wounded span from being condemned and all traffic banned depends on something far more elusive than concrete, steel and workers wielding jackhammers and driving backhoes. This is about money — and how New Jersey does not have enough for all the bridges that need fixing. In many ways, the Anderson Street Bridge is an example of how an ordinary, hardworking local bridge got lost in a numbers squeeze — with too many bridges across the state in dire need of repairs and too little money available to do the job.
A year ago, the state transportation commissioner, Jamie Fox, a Democrat who has since resigned, proclaimed that New Jersey faced a “crisis” over broken bridges and dwindling balances in the Transportation Trust Fund to fix them. But in his budget address last week, Governor Christie stuck to his Republican-based script of refusing to raise the state’s gas tax to replenish the fund. Without mentioning Fox, Christie criticized any notion of a financial crisis affecting roads and bridges as “just a politically driven mischaracterization.” The opposing points of view, voiced by Fox and Christie, are no mere disagreement over fiscal policy. What seems to be evolving now is a potentially divisive and drawn-out political struggle in Trenton over the increasingly complex question of how to find more money to replace rotting bridge beams and fill potholes on the estimated 2,000 bridges — including the Anderson Street span — that have been labeled structurally deficient or functionally obsolete across the state. The designation doesn’t mean the bridges are on the verge of failure, but that they have serious problems that require serious fixes.
Fox said he was confident that most state legislators would support an increase of 5 cents. But he adds that such an increase would result in only $250 million in additional bridge repair money — hardly enough for what some experts say is a statewide repair job that could cost as much as $30 billion overall. “The real question is whether we muddle through or do we actually make a decision to fix bridges,” Fox said. Another proposal, by Assemblyman John S. Wisniewski, the Sayreville Democrat who heads the Assembly Transportation Committee and is viewed as a potential gubernatorial contender, would raise the tax by 25 cents, to 39.5 cents a gallon. While seemingly large, such a tax increase, Wisniewski contends, would cost most New Jersey drivers only 50 cents a day — or about $182 a year. But Democrats and Republican legislators alike have been slow to support him.
State transportation officials say work to install a new bridge deck on the Pulaski Skyway is past the halfway point, although a planned swap of southbound traffic to new pavement on the northbound lanes is delayed. “The overall project is still on schedule and expected to be completed in 2020,” said Stephen Schapiro, an NJDOT spokesman, in response to questions about an NBC News 4 report about delays pushing the project back. “The (bridge deck) project is more than halfway done, as the majority of the northbound side is completed and there has been a lot of work done underneath the southbound lanes.” Installing the new bridge deck is probably the most visible of 10 phases of the project to drivers. It required closing the northbound lanes in April 2014. That part of the massive $1 billion project is several months behind schedule, which is the planned switch of southbound traffic to the newly installed bridge deck on the northbound lanes. That change was supposed to happen by the end of 2015, to allow crews to replace the bridge deck on the southbound side of the Skyway.
Crews were seen installing guardrails on the northbound lanes Monday morning during a trip across the Skyway which showed a sizable section is still being worked on. Guardrail work is continuing and Schapiro said no date has been set for the lane switch. “At the end of the winter, the project team will re-evaluate the status of the project,” Schapiro told NJ Advance Media. Last year, DOT officials announced in April that the project to install a new bridge deck on the northbound lanes was knocked off schedule after crews found steel floor beams under the old road surface were deteriorated and had to be replaced. New beams were installed in a series of full weekend long closures of the 3.5 mile long Skyway last year. That work, along with the harsh winter of 2015, pushed completion of replacing the northbound bridge deck to the end of 2016, which in turn has delayed work on the southbound lanes.
Taxes on income and consumption, advocates argue, are far more equitable — but they’ll never get a fair hearing in our fair state. In any discussion of New Jersey’s record-breaking property taxes, there are three certainties: The first being they’ll continue to increase. Secondly every elected official and candidate will pledge to act decisively to halt the increase and reduce the burden. The last certainty is that nothing of consequence will be done. It came as no surprise when the Department of Community Affairs released its findings showing that the average property tax in the state had risen to $8,353 — an increase of $191– cementing New Jersey’s first place in the nation, a position it’s occupied for years.
In his budget message this past week, Gov. Chris Christie offered his customary boast about the effectiveness of the cap, comparing it to previous administrations when he said property taxes rose by as much as seven percent per year. At the same time, he appeared satisfied to continue to rely on the cap as the principal restraint on rising tax rates. Aid to municipalities, long a crucial element in helping to ease the property tax burden, will be flat funded again in the coming fiscal year while the proposed one percent increase in aid to local school districts is negligible and a great many districts will experience no increase at all. The two state programs of direct property tax relief — the homestead tax credit and the senior freeze — will remain static as well, and for many of the 650,000 homeowner beneficiaries any savings will be offset by local increases.
Legislators place responsibility at the feet of local officials, arguing that the state does not establish or collect property taxes, while county, municipal, and school district officials complain the state has been exceptionally tight-fisted in providing assistance to help meet their ever-increasing costs. While it surfaces periodically, there has been little serious discussion concerning systemic changes to the tax structure to address the overreliance on property-tax revenue to support local governments. More than 1,200 entities — counties, municipalities, and school districts — look almost exclusively to property taxes to fund their operations, to pay salaries and benefits, and purchase everything from kindergarten crayons to snow plows.
An infinitely more equitable system, proponents say, would involve a broad-based tax on income or consumption, one much more indicative of an individual’s ability to pay rather than the arbitrarily established value of one’s home. Each time such a suggestion is offered, however, it is quickly and ferociously dismissed as another subterfuge to raise taxes, a cynical attempt to extract greater sums of money under the guise of tax relief or fairness. The fear of an anti-tax backlash and accusations of support for greater government spending is genuine and sufficient to convince legislators to continue to live with an imperfect and unfair system while working largely at the margins.
Atlantic City Mayor Don Guardian on Monday denounced a plan for the state to take sweeping control of the financially troubled city, saying the legislation would create a “fascist dictatorship” that would “trample” on the civil and constitutional rights of residents. During a news conference outside city hall, Guardian and other leaders in the Jersey Shore gambling resort town called on members of the state Legislature to change or reject the plan. They also said they’ve been working with state lawmakers on an alternative rescue bill that would give the city a greater say. And if all fails, City Council President Marty Small said, local officials might pursue action to stop the state plan. “This is an insult to democracy and to American citizens living in Atlantic City,” Guardian said of the legislation.
State Senate President Stephen Sweeney (D-Gloucester), the main sponsor of the state proposal, called the comments “the most childish act I’ve seen since I’ve been in government.” The rancor is the latest chapter in the ongoing saga of how to revive Atlantic City, which has given the state billions of dollars in tax revenue since casino gambling was legalized there 30 years ago but has seen four casinos close in recent years amid growing competition in neighboring states. The city’s tax revenue has been sliced in half because of the closings, and officials warn that the city could run out of money within weeks. Last week, Sweeney introduced a bill that would allow the director of the state Local Finances Board to take control over a number of city functions for five years, including renegotiating union contracts, restructuring the city’s debt, selling off city assets, and more. Sweeney — a likely Democratic candidate for governor next year — touted it as a “cooperation” between the state and city. But Guardian stressed Monday that the bill went much further than he expected, saying it is “far from a partnership.”
Guardian said his administration deserves to be more involved because it slashed $50 million from the city budget over the last two years and is open to making more cuts. He added that Christie twice rejected legislation that would allow casinos to make payments for 15 years instead of taxes — a move aimed to end costly tax appeals for the city. And, the mayor said, the state has yet to help mediate a $170 million tax appeal from the Borgata hotel and casino. Guardian said he believes the state taking over Atlantic City opens up the door to takeovers in places like Paterson and Newark. Brian Murray, a spokesman for Christie’s office, said Atlantic City’s leaders have been given more than five years “to deal with its excessive spending and structural budget deficits.”