High Court hears arguments over hospital tax exemptions

SPRINGFIELD, Ill. (AP) - Lawyers for a central Illinois hospital and the city of Urbana on Thursday went before the state Supreme Court to argue whether a law allowing not-for-profit hospitals to avoid paying property taxes is constitutional.

An attorney for Carle Foundation Hospital told the court 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.

"What the Appellate Court did is inconsistent with more than 90 years of precedent," Pflaum said.

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

"It can't create a special kind of exemption for hospitals," Grosser added.

The court's decision in the case goes beyond the eight years of property taxes that Carle has paid into an escrow account and potentially could be forced to pay Champaign County taxing bodies.

Some municipalities contend many not-for-profit hospitals are profitable and should be required to contribute their fair share of taxes to their communities.

After the arguments ended, Urbana Mayor Laurel Prussing said Thursday that regardless how the court acts, the issue is one the legislature should weigh.

"Why should the most profitable companies in the state be shifting their burden onto every other business and homeowner?" Prussing said.

According to Prussing, Urbana lost 11 percent of its assessed property value for tax purposes when Carle and another Urbana hospital, now called Presence Covenant Medical Center, were relieved of paying more than $6 million a year in property taxes.

About 156 of Illinois' more than 200 hospitals are not-for-profit.