SPRINGFIELD – A long-awaited decision on the taxable status of Provena Covenant Medical Center is expected from the Illinois Supreme Court on Thursday morning.

But the high court has so many options in this case, what this ruling will mean to local taxing districts, Covenant and other nonprofit hospitals in Illinois is anybody's guess.

"The court doesn't necessarily have to resolve all the issues that are swirling around out there," warns Mark Deaton, general counsel for the Illinois Hospital Association.

The Provena case dates back to 2002, when Covenant – part of Provena Health, a Catholic health system in suburban Chicago – reapplied for its property tax exemption and was turned down by the Champaign County Board of Review.

The Illinois Department of Revenue officially removed the hospital's tax exemption in 2004, finding Covenant didn't qualify as either a religious or charitable institution, and the case has been working its way through the appeals process ever since.

At stake for local taxing districts is about $1.2 million a year in property taxes the hospital had been paying. Some $6.1 million paid between 2003 and 2007 is back in Provena's possession for the moment, and the hospital wasn't billed for the last two tax years while a final decision has been pending.

Deaton said Provena could win or lose on the narrow facts before the Department of Revenue, meaning the Supreme Court decision could have little ramification outside Champaign County.

"Beyond that, it gets pretty difficult to read the tea leaves," he said.

The court also has the option of taking a broader stance on what defines a charitable institution in Illinois: Is a charity defined by how much free service it gives away, how much money it makes or what it actually does with its assets?

Deaton said the state Supreme Court answered that question in a 2004 case, ruling that a charity isn't defined by the percentage of money it gives away, but what it does with its assets.

"It boils down to why do they exist," he added.

For some cash-strapped Urbana taxing districts, this case could have a big impact down the road if Provena loses. But little of the millions of dollars the hospital would have to repay in back taxes would actually flow to those districts, according to the Champaign County treasurer's office.

That's because all Covenant properties are in a tax increment financing district the city established for the redevelopment of the area north of University Avenue, between Wright Street and Cunningham Avenue. Most of Covenant's back tax money would be owed to the TIF fund, and most of its future tax payments would wind up in that fund until the TIF expires in 2013.

Urbana City Comptroller Ron Eldridge said the city council has options, though. One would be to declare a big chunk of repaid Covenant tax money in the TIF as surplus money and share it with the schools and other taxing districts. But, he adds, the city would need a clear and final answer on the taxable status of Covenant and public discussion before the money could go anywhere.

Provena Covenant Medical Center and Carle Foundation Hospital – which also lost its property tax exemption but is waiting for the Provena case to be settled before its own appeal will be heard – are big employers for the city of Urbana.

But Urbana Mayor Laurel Prussing says the hospitals' tax money makes a much bigger dent in the budgets of local governments than it does in the hospitals' overall budgets.

"This is big to us, but small to them," she said. "You have to look at their total revenues. They are not going to suffer the way we would suffer."

For the Champaign County Board of Review, a three-member body that hears challenges to tax bills but otherwise has little public exposure, the outcome of the Covenant tax case is hard to predict, according to the board's Chairwoman Laura Sandefur.

"I've wondered if people are going to read something into this that was never intended," she said. "We were just doing our job when we looked at this in 2002. I don't think any one of us were looking at some sort of policy decision."

Sandefur recalls a trip to the Carle emergency room in the last year or two, when she injured her ankle and saw prominent signs reminding patients to inquire about charity care. The hospitals are even advertising their charity care programs in the media these days, she says.

Would that be happening if the board of review hadn't raised the issue of charity care in exchange for a tax exemption, Sandefur wonders?

What she does know is that the board asked the question, she says.

"The questions we asked made it all the way to Supreme Court," she adds.