Two non-profit hospitals in Illinois have been ordered by a regulatory board to pay property taxes as a result of the state's law governing the matter being put in legal limbo.
Carle Health System and Presence Covenant Medical Center in Urbana were both ordered by the Champaign County Board of Review to pay property taxes of about $10 million combined annually, the Urbana News-Gazette reported.
The board decided to place the providers on the property tax rolls not long after an Illinois appeals court decided to overturn the state's 2012 law that essentially exempted every non-profit provider from paying taxes in the future. Although the appellate court ruled that that law was unconstitutional, the Illinois Supreme Court will likely decide the case sometime down the line.
"Placing hospitals on the tax rolls will have an immediate negative impact for the taxing bodies because any money municipalities collect without justification remains in question until the courts resolve the hospital tax-exemption issue," Carle said in a statement.
Illinois has had a long line of battles between regulators and hospitals over tax exemptions. In 2011, regulators stripped exemptions from three hospitals in the state, leading to the 2012 law and, in part, to the issue currently ongoing in Urbana.
However, the issue of whether non-profit hospitals and healthcare systems should be exempt from taxes is hardly a local issue. Debates about whether non-profit providers function more like for-profits has been raging elsewhere in the United States. And, in New Jersey, a hospital recently lost its exemption, leading to legislators nearly passing a law that would have required acute care providers in the Garden State to reimburse municipalities for some services, with payments based on the number of beds in operation.