Capitol Fax.com - Your Illinois News Radar

Supremes side with hospitals on property taxes

Posted in:

Illinois

Illinois not-for-profit hospitals can continue to skip paying property taxes, after a Thursday ruling by the state’s highest court.

The Illinois Supreme Court upheld a lower court’s ruling that a 2012 law exempting not-for-profit hospitals from having to pay property taxes is constitutional. That law says that not-for-profit hospitals in Illinois don’t have to pay property taxes as long as the value of their charitable services is at least equal to what they would otherwise pay in taxes.

About three-fourths of the state’s more than 200 hospitals are not-for-profit.

* From the opinion…

Section 15-86(c) of the Property Tax Code provides that a hospital applicant “shall be issued” a charitable property tax exemption if the value of certain qualifying services or activities provided by the hospital in a given year equals or exceeds the hospital’s estimated property tax liability for the same year. 35 ILCS 200/15-86(c). In her single-count complaint, plaintiff alleged that section 15-86(c) commands that the hospital applicant receive the charitable property tax exemption if the statutory criteria are satisfied. Plaintiff contended that section 15-86 was facially unconstitutional because the statute mandates the issuance of the charitable property tax exemption without consideration of the constitutional requirement that the subject property be “used exclusively for *** charitable purposes” […]

The appellate court affirmed. The court rejected plaintiff’s argument that the legislature intended the word “shall” in section 15-86(c) to be mandatory. Rather, the court held that the word “shall” is merely directory

* Illinois Hospital Association…

The Oswald plaintiff argued that the statute was unconstitutional because it does not expressly mention the constitutional requirements for exemption. The Supreme Court rejected the plaintiff’s argument:

“In the case at bar, while [the statute] does not expressly provide that the hospital charitable property tax exemption is limited to applicants that satisfy the constitutional requirement of exclusive charitable use, section 6 of article IX of the Illinois Constitution does say so, and we presume that the legislature intended to comply with this constitutional limitation.”

“In the case at bar, the legislature was certainly aware of section 6 of article IX of the constitution and its requirement of exclusive charitable use, and it intended to enact a constitutional hospital charitable property tax exemption.”

* SEIU…

“Today’s Illinois Supreme Court ruling upholding the constitutionality of exempting non-profit hospitals from paying property taxes when their charitable services and activities equal the tax amount does not end the debate.

“The constitution requires ‘exclusive charitable purposes’ for property tax exemption, and the Illinois Hospital Association (and the hospitals themselves) will have to answer why it continues to defend these mostly large corporate non-profit hospitals that abuse their tax exemption.

“A law crafted by the IHA allows non-profit conglomerate hospitals to count such things as Medicaid shortfalls and graduate medical education toward its ‘charitable care’ total, making it possible for most hospitals to retain their exemptions without providing any additional care to the poor.

“Additionally, these hospitals – Northwestern Memorial, Advocate, Presence-Amita and others – make billions in profits collectively, pay their executives millions and divest resources into off shore bank accounts instead of paying employees fairly. Many have employees whose wages are so low that they rely on Medicaid.

“The one-two punch strategy of the IHA is to enrich its large corporate non-profit hospitals while keeping wages for service workers low and making it hard for hospitals in economically challenged communities to survive.

“We call on elected officials to address this issue and hold these hospitals and the IHA accountable, even as future lawsuits will more directly address the IHA’s abuse of the charity care requirement.”

posted by Rich Miller
Friday, Sep 21, 18 @ 10:32 am

Comments

But the hospitals will still charge you $20 for an aspirin.

Comment by Anonymous Friday, Sep 21, 18 @ 10:43 am
Corporations are people, my friend!
-Mitt Romney
-Illinois Supreme Court

Comment by Almost the weekend Friday, Sep 21, 18 @ 10:45 am
How do they reconcile paying nothing to support infrastructure (roads, water, sewers, police/fire) while paying themselves six figure administrative salaries?

Comment by Jocko Friday, Sep 21, 18 @ 10:55 am
This was a suit brought by a retired teacher. So why is SEIU chiming in? I thinking union’s should restrict comments on things that affect members such as wages and benefits. There is nothing to suggest that a property tax exemption would affect their member’s wages and benefits.

I think this is one of the reasons unions get a bad rap because of putting their nose where it doesn’t belong. We need to stick to issues that affect our members if we are going to survive.

Comment by A Jack Friday, Sep 21, 18 @ 10:57 am
The lower courts and the IL SC basically confirmed that a law enacted by the GA is assumed to be constitutional unless you can clearly prove otherwise.

Comment by RNUG Friday, Sep 21, 18 @ 10:58 am
== How do they reconcile paying nothing to support infrastructure (roads, water, sewers, police/fire) while paying themselves six figure administrative salaries? ==

That is a moral and ethical question, not a legal one.

Comment by RNUG Friday, Sep 21, 18 @ 10:59 am
–“Additionally, these hospitals – Northwestern Memorial, Advocate, Presence-Amita and others – make billions in profits collectively, pay their executives millions and divest resources into off shore bank accounts instead of paying employees fairly. Many have employees whose wages are so low that they rely on Medicaid.–

Bet they can’t wait for a governor who will put an end to these egregious practices.

Comment by ChrisB Friday, Sep 21, 18 @ 11:02 am
== How do they reconcile paying nothing to support infrastructure (roads, water, sewers, police/fire) while paying themselves six figure administrative salaries? ==

===That is a moral and ethical question, not a legal one.===

Also a good fiscal question in addition to moral and ethical question - churches too. Both are huge cost shifts to the rest of us and morally and fiscally offensive.

Comment by Nietzsche Friday, Sep 21, 18 @ 11:23 am
The worst of the hospital had trouble meeting even this low level of charitable care. It seems like the law locks in some of the abuses. I don’t know what the advocates against the hospitals can do though if the GA is going to allow the abuses by law.

Comment by Three Dimensional Checkers Friday, Sep 21, 18 @ 11:35 am
I get that hospitals (and other nonprofits) provide charitable care too. But has it been proven the care exceeds the amount of property taxes that would have been collected?

Comment by Da Big Bad Wolf Friday, Sep 21, 18 @ 11:39 am
==But has it been proven the care exceeds the amount of property taxes that would have been collected?==

No, however the exemptions definitely exceed the hospitals’ cost of political contributions/lobbying - welcome to IL.

Comment by Deadbeat Conservative Friday, Sep 21, 18 @ 11:55 am
==Also a good fiscal question in addition to moral and ethical question - churches too.==

I live a couple of blocks away from a priest whose home, which is not on a church “campus”, is tax exempt. My town has numerous single family homes that are tax exempt for similar reasons.

Comment by City Zen Friday, Sep 21, 18 @ 11:59 am
Not having them pay Property tax gets us closer a National Health Service. Keep the ball moving forward!

Comment by Union Man Friday, Sep 21, 18 @ 12:17 pm
“Additionally, these hospitals – Northwestern Memorial, Advocate, Presence-Amita and others – make billions in profits collectively, pay their executives millions and divest resources into off shore bank accounts instead of paying employees fairly. Many have employees whose wages are so low that they rely on Medicaid.”

That’s not my definition of non-profit. What am I missing?

Comment by a drop in Friday, Sep 21, 18 @ 12:24 pm
=I live a couple of blocks away from a priest whose home, which is not on a church “campus”, is tax exempt. My town has numerous single family homes that are tax exempt for similar reasons. =

Not surprised - Bishop Paprocki of Springfield is a hard-hitting political operative of Raunerism and has a tax-exempt diocese.

Comment by Nietzsche Friday, Sep 21, 18 @ 12:29 pm
Dateline Springfield, Illinois: Population of the city & most surrounding communities is dropping, yet both hospitals are in the midst of an extravagant expansion frenzy.

Not much of a case for tax-exempt status.

Comment by Stumpy's bunker Friday, Sep 21, 18 @ 12:38 pm
===Population of the city & most surrounding communities is dropping, yet both hospitals are in the midst of an extravagant expansion frenzy===

Hospitals are economic and technological engines. Should they pay some property taxes? Yes. But spare me the grumbling about “extravagant” expansions. Springfield can’t live on state workers alone.

Comment by Rich Miller Friday, Sep 21, 18 @ 12:55 pm
Look at some of these hospitals 990 forms. What the compensation is for directors. The homes that are listed for them. Or the memberships to some of the cities most exclusive private clubs. Yeah, they should not pay any tax. That’s sarcasm.

Comment by BenFolds5 Friday, Sep 21, 18 @ 1:09 pm
What venom to people who will try and save your life when you are rolled in the door.

Don’t like their services? Amble down the road to a business you like better.

Comment by Plutocrat03 Friday, Sep 21, 18 @ 2:49 pm
I do not like to be mean on a personal level but this is just the silliest post.
==
Not surprised - Bishop Paprocki of Springfield is a hard-hitting political operative of Raunerism and has a tax-exempt diocese.

Comment by I Miss Bentohs Friday, Sep 21, 18 @ 3:02 pm
==people who will try and save your life when you are rolled in the door==

For a reduced rate? Out of the goodness of their hearts?

Comment by Jocko Friday, Sep 21, 18 @ 3:14 pm
==Not surprised - Bishop Paprocki of Springfield is a hard-hitting political operative of Raunerism and has a tax-exempt diocese.==

Is that the same Raunerism that signed HB40? If so I missed the Bishop’s endorsement of taxpayer funded abortions. Sheesh.

Comment by don the legend Friday, Sep 21, 18 @ 3:19 pm
I have mixed feelings about this. It’s hard here in Springfield to ignore the economic impact of the medical community, and the wealth created, and not think that some of their enterprises should pay taxes.

On the other hand, it’s nice to see the Ex-Mayor for Life of Urbana get a final judicial comeuppance after she beat this drum forever while doing very little to bring non-medical (and non-UI) jobs to the People’s Republic.

Comment by Arthur Andersen Friday, Sep 21, 18 @ 3:59 pm
==What venom to people who will try and save your life when you are rolled in the door.==

What venom? You mean the lively, earnest conversation above? Look for a brown recluse spider if you want venom. Try your shoe.

Comment by Da Big Bad Wolf Monday, Sep 24, 18 @ 6:49 pm