Fourth district ruling overturns statute granting hospital tax exemption
The 1970 Illinois Constitution allows the General Assembly to exempt properties that are "used exclusively for…charitable purposes" from property taxes. Ill. Const. 1970, art. IX, § 6. How those exemptions work for not-for-profit hospitals has been contentious for a while. Cash-strapped counties want to collect property taxes; not-for-profit hospitals want to claim an exemption.
In Carle Foundation v. Cunningham Township, 2016 IL App (4th) 140795, the Illinois Appellate Court, Fourth District, raises this issue again, holding that a 2012 statute designed to clarify the definition of "charitable purposes" is unconstitutional and the hospital is thus liable for property taxes. On March 14, the Illinois Supreme Court stayed enforcement of the fourth district ruling "pending disposition of the petition for leave to appeal" to the high court. Find out more in the April Illinois Bar Journal.
Member Comments (3)
It is time for these hospitals to contribute financially to the communities in which they are located. A 'PILOT' Plan (Payment in Lieu of Taxes) would probably work best under these circumstances. It's the fairest approach for both sides, and is the solution used in several other states who have confronted the same issue.
I agree 100% with Donald Rubin and I would go even further. The so-called not for profit hospitals are earning hundreds of millions of dollars upon which they pay no income taxes. At the same time they are paying their top administrators millions of dollars in compensation and benefits. Our state's deficit problems would go away quickly if they paid their fair share.
There is a bit of a 'back story' that needs to be told in order to fully understand the situation. These hospitals were first found to be insufficiently "charitable" under the prior statute. When the courts affirmed that holding, the hospitals and their lobbyist organization fellows traveled to Springfield and persuaded the General Assembly and the Governor to write a new law to, ahem, "clarify" the definition of "charitable purposes." Like many such, er, tailored statutes, the courts made short work of their legality [see also Best v. Taylor Machine Works, 689 NE2d 1057 (Ill 1997)].