In a shift for nonprofit hospitals that have been exempt from paying property taxes, New Jersey's largest hospital association says its members are willing to make payments in lieu of taxes to the towns they operate in.

Braden Gunem, Thinkstock

The New Jersey Hospital Association recently declared its support for a proposal in the Legislature that would require the payments as "community service contributions," The Record newspaper reported. The legislation was introduced after a court decision this summer that eliminated a property tax exemption for Morristown Medical Center because its operations were little different from those of a for-profit company.

The hospital association endorsed a proposal from state Senate President Stephen Sweeney to assess a fixed daily contribution of $2.50 per bed after it feared that the decision would lead to tax battles with other hospitals. The payments from the state's 60 nonprofit hospitals would total $21 million to $25 million, according to the association's estimates.

"Our goal was to support a statewide solution that would strike a fair balance between hospitals and municipalities and allow them to carry on together in their shared goal of community health, safety and well-being," said Betsy Ryan, the association's president and chief executive.

But officials with the New Jersey League of Municipalities are against the measure, saying the assessment formula is inadequate. Michael Cerra, government affairs director for the group, said the legislation raises constitutional questions by giving special treatment to one type of tax-exempt institution.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

 

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