State removes Carle's property tax exemption

State removes Carle's property tax exemption

URBANA – The Illinois Department of Revenue has stripped Carle Foundation Hospital of its property tax exemption, but the hospital will have a chance to appeal.

The Champaign County Board of Review – which originally placed Carle on the tax rolls for the years 2004 and 2005 and has been waiting for the state to uphold that decision – received word of the state's ruling by mail on Monday, board member Stan Jenkins said.

Carle said it was "extremely disappointed" in the ruling.

"We will vigorously appeal this decision on behalf of our community," said James Leonard, president and chief executive officer of Carle, in a prepared statement.

The state decision involves exemptions on five Carle properties that include the main hospital campus in Urbana, Jenkins said.

Illinois Department of Revenue spokesman Mike Klemens said the decision means the state found Carle doesn't deserve a state tax exemption as a charitable organization.

Carle, "was not a charitable organization operating in a charitable manner," he said.

It is the second such decision about a local hospital from the Department of Revenue, and a third one is on the way for another hospital in Illinois, Klemens said.

Provena Covenant Medical Center in Urbana lost its property tax exemption last year, also on the premise that it wasn't a charitable organization.

"By revoking our property tax exemption, as well as Provena Covenant's, health care for the uninsured and underinsured within our community is put at great risk," said Leonard's statement. "This action takes dollars from local health care, redirects them toward non-health care services, and does nothing to meet the health care needs of the poor."

Another Illinois hospital was also mailed a letter Friday notifying it of the loss of its state tax exemption, Klemens said. He declined to identify the hospital until later this week, but said that case wasn't initiated by a local Board of Review action, as was the case for Carle and Covenant. The Department of Revenue reviewed that hospital's exemption as a result of a change in the hospital's ownership, he said.

Carle now has a two-step appeals course to follow, if it chooses. The hospital has the right to request a hearing before an administrative law judge who would, in turn, make a recommendation to the Department of Revenue. And if the state stands by its decision after that process, Carle could appeal through the courts.

Regardless of what the state decides, both Carle and Provena Covenant retain their federal tax-exempt status.

Provena Covenant is currently in the latter stage of appeals through the courts.

Provena Covenant spokesman Gregory Alford said he found the state's decision about Carle disappointing.

"From our perspective, it's certainly disappointing that we are seeing charitable institutions go through this time-consuming and expensive process to defend ourselves," he said. "It really hurts the communities that we serve, because it's diverting resources that would otherwise go to improving technology, improving access to care and improving our overall facilities."

Carle has paid $4.14 million in property taxes for the years 2004 and 2005, and tax bills for 2006 that are payable this year won't be out until later this spring, according to the Champaign County Treasurer's office.

The property tax exemption issue arose several years ago, when local patient rights advocates accused both Carle and Covenant of failing to offer enough charity care to the needy and of using harsh bill collection tactics.

Both Carle and Covenant have since considerably broadened their charity care and overhauled their bill collection practices.

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