Groups weigh in on hospital tax exemptions

With a deadline looming, competing proposals are emerging for legal standards on how Illinois nonprofit hospitals could keep their property tax exemptions.

Gov. Pat Quinn set Thursday, March 1, as a deadline for recommendations for a legislative solution to the problem, which grew from a 2010 Illinois Supreme Court ruling. At stake are millions of dollars in tax revenues that hospitals could contribute to cities, parks and schools.

In one proposal, the Fair Care Coalition — a group of health care advocates — has said each hospital should provide 6 percent of its total revenue for charitable benefits to qualify for a tax exemption. Eighty percent of that amount would have to be in the form of free or discounted care for the poor.

The coalition sent the proposal to the governor’s office in a letter dated Feb. 17. If a hospital failed to meet the standard, it would be required to pay into a pool of funds to be distributed to nonprofit and public hospitals that met the standard, the Fair Care Coalition proposed in the letter.

The Illinois Hospital Association has been opposed to similar proposals in the past, favoring instead a broader definition of how nonprofit hospitals provide benefit to their communities.

The Civic Federation on Monday released a statement supporting the continuation of property tax exemptions for qualifying hospitals and urging the Legislature to set clear standards of eligibility.

The Civic Federation’s statement said it supports a threshold equal to the estimated tax bill for the hospital property if it did not receive an exemption. Under the proposal, a nonprofit hospital would be required to provide charitable care and other community benefits equal to or greater than the property taxes the hospital would have paid.

Last year, the Illinois Department of Revenue denied tax exemptions to three hospitals, citing an Illinois Supreme Court ruling.

Quinn later ordered state officials not to issue any new rulings, saying he hoped to work with the hospital industry to find a legislative compromise.

It’s not clear whether Quinn would direct the Department of Revenue to start issuing more rulings on other hospitals’ tax exemptions if a compromise can’t be reached by Thursday.