Illinois Supreme Court to examine two simple truths
The Illinois Supreme Court will hear oral arguments Thursday in the case between Carle and local taxing bodies. The central issue is whether not-for-profit hospitals in Illinois should receive property tax exemptions because their charitable missions focus on providing free care to patients who need it. Public bodies say hospitals generate revenue, so they should also pay property taxes.
The reality is, amid the complex history of this case and the far-reaching impact of the Court’s decision, there are two simple truths:
- Healthcare and community go hand in hand.
- And rules keep our communities strong.
1. Healthcare and community go hand in hand—In fact, this all started with a legal agreement years ago between Carle and the Urbana taxing bodies. That agreement became a broken promise.
The hospital and Urbana taxing bodies agreed Carle would fund community services, and the city committed to not placing the longstanding non-profit on the tax rolls. Despite their promise, the taxing bodies took the immediate payment, later moving to tax Carle properties. Taking funds and then demanding Carle pay taxes—on top of the millions it provides in lifesaving charity care for citizens—is double-dipping.
In addition to paying property tax under protest for years, Carle took legal action against the taxing bodies in 2007 to stand up for patients and preserve community healthcare resources.
2. Rules keep our communities strong—and the rules have been unclear for years.
When an earlier property tax lawsuit involving Provena Covenant hospital prompted direction from the Illinois Supreme Court in 2010, the state legislature crafted a bill to provide clarity. The law passed in 2012 requires hospitals to provide a specific level of charity care to maintain property tax exemptions. Carle’s case began to move forward. Although three judges (including the First District Appellate in December 2016) ruled in support of the constitutionality of the 2012 law, the Fourth District Appellate Court said the law is unconstitutional.
That is why the Supreme Court will hear Carle’s case this week.
And here is what you need to know.
- Local hospital property taxes don’t necessarily mean more money for a taxing body.
Public bodies set levies that establish the amount of property tax money that will come in that year. All property owners combined pay that levy, which is proportionately based on assessed values among property owners, including businesses and homeowners. Property tax is “revenue neutral.”
- The city of Urbana and other taxing bodies never had access to the Carle property tax monies paid under protest with the exception of a handful of properties that Carle continues to appropriately pay today.
Often, Urbana’s mayor talks about how much of the city’s assessed property value was lost when hospital property was taken off the tax rolls. The truth is property tax money only came in for a handful of years after the hospitals were incorrectly placed on the tax rolls, and it was always paid under protest. Carle has been exempt since 1946.
Although the issue has long centered in Urbana, the tax topic isn’t only a concern in this community. The question of what a hospital must provide to maintain longstanding property tax exemption has been unclear for years. Carle’s case is important for all Illinois hospitals, particularly the 40 percent of hospitals facing closure due to extreme financial pressure.
In a time when health systems face declining reimbursements, increasing numbers of patients who cannot pay, increasing regulation and costs, and growing uncertainty about the future, Carle must remain strong so we can address the increasing needs of our patients.
The Supreme Court is expected to release an opinion later in the year. Justices can weigh in on a portion of the Carle case and determine the constitutionality of the law.