Illinois Supreme Court Weighing Hospital Tax Status

The Illinois Supreme Court has heard arguments in a case looking into the constitutionality of hospital tax exemptions. The Illinois Supreme Court considered a case Thursday that asks whether not-for-profit hospitals have to pay property taxes. The case involves Urbana-based Carle Foundation Hospital and its clinics — though it could affect health systems across Illinois. At issue is the constitutionality of a state law that exempts not-for-profit hospitals from paying property tax.

An attorney for Carle told the court Thursday the General Assembly had a right to create a path for not-for-profit hospitals to keep exemptions that allows them to not pay property taxes. Steven Pflaum told the high court the 4th District Appellate Court erred a year ago when it ruled the law unconstitutional.

He argues every dollar a charitable hospital would spend on taxes takes away from other priorities.

"Hospitals are not-for-profit entities, and they need to be able to devote their resources for the charitable purposes that they serve, to delivering high-quality health care," Pflaum said.

Frederic Grosser, representing Urbana and Cunningham Township, contends the law that hospitals deserve exemptions if the value of charitable services exceed the value of their potential tax exemptions went beyond what was allowed by the constitution.

Urbana Mayor Laurel Prussing, says losing Carle from the tax rolls cost the city 11 percent of its tax base.

"What it did was shift Carle's burden to every other taxpayer in Urbana," Prussing said. "Every other business, and all the residents."

At stake in the case is eight years of property taxes that Carle has paid into an escrow account and potentially could be forced to pay Champaign County taxing bodies.

There's no timeline for when the justices might rule on the case.