Prussing pressing case against Carle tax exemption
URBANA — Mayor Laurel Prussing is continuing to take a strong stand against a state-mandated property tax exemption for Carle Foundation Hospital, and she plans to ask for support from local lawmakers.
She said last week that a number of approaches could be taken to fix what would become a $830,000 budget problem for the city: Either the legislation needs to be changed, or the law needs to be challenged in the courts.
A state law passed last year made Illinois health centers exempt from property taxes if they can show their "charity care" exceeds their tax payment. Champaign County taxing bodies expect to lose more than $6.3 million in property tax revenue from the exemption — Urbana taxing bodies alone expect to take nearly $4.6 million of that loss.
If it comes to it, Prussing said, she would consider filing a lawsuit to challenge the tax-exemption law. Given how quickly the matter threatens to have financial impact in Champaign County, she said, she might do so sooner rather than later.
Prussing contends that Urbana is being disproportionately affected — Carle's charity care extends into a 25-county region, she said, and Urbana's taxing bodies will be footing 83 percent of property tax bill, even though it only has 3 percent of the population in the region.
That is precisely the situation state Rep. Naomi Jakobsson, D-Urbana, hopes to correct with new legislation. She said she is working on a bill she hopes to have completed by today.
"I think that when we look at the various services that people from all over are receiving, we need to make sure that it's not disproportionately affecting Urbana," Jakobsson said.
A spokesperson for Carle declined a request for comment on Monday, but in a post on the hospital's website, Carle chairman Phil Blankenburg said local elected officials who have been speaking out against the legislation have it wrong. "The true Carle effect," he said, is $32 million in discounted or free heathcare spread among nearly 20,000 patients last year alone.
That's in addition to a 5,900-employee and $500 million payroll, $78 million in deals with local businesses and an Urbana construction project that has provided 1,500 jobs and $100 million in economic impact.
In 2012, 4,400 Urbana residents received a total of $5.6 million in charity care, he said. Care for Champaign residents totaled $8 million.
He said Carle funds training programs at Parkland College, and it funds Urbana-based agencies like Cunningham Children's Home, Eastern Illinois Foodbank and Crisis Nursery.
"When you consider the levels of charity care and community benefit, the economic impact of jobs and local spending, and the effect of thousands of people visiting our community each year for health care services, the total benefit to the community far outweighs the property tax exemptions," Blankenburg wrote. "That's the true Carle Effect."
Danny Chun, spokesman for the Illinois Hospital Association, said the law is set up to keep tax-exempt hospitals accountable.
"We strongly believe hospitals provide much more in services and benefits to their communities than the value of the tax exemption," Chun said. "And that's the way the law is set up. You estimate what you think the tax liability would have been, and the hospital has to show it's doing more than that."
Chun pointed out that Illinois Supreme Court decisions dealing with whether hospital services qualify as charities for tax purposes have been "very, very muddy."
Prussing wants state legislators to revise the law to take into account communities that are affected the way Urbana will be, and she's hoping the Champaign County Board and perhaps the Champaign City Council will approve of resolutions she will propose urging lawmakers to do so.
She said she read the floor debate, and the law's effect on local communities was never mentioned.
"There's no discussion on what the impact would be on local governments, and certainly the impact would be severe in Urbana," Prussing said.
Further, Prussing said that what the state law qualifies as charitable is too broad and is in direct contradiction with court rulings. And she thinks that the health care they provide to low-income or uninsured patients is already subsidized by the prices other patients pay for regularly-priced procedures.
"This is just a reflection of a huge powerful lobby that told the Legislature that they were going to go broke," Prussing said.
Carle made $108 million in 2011, according to an annual report it files with the Illinois attorney general. It had $763 million in unrestricted cash reserves.
"There may be some hospitals that are on edge, but certainly Carle and Presence are not on the edge," Prussing said.