Illinois Supreme Court Upholds Property Tax Shield For Non-Profit Hospitals

Non-profit hospitals in Illinois will still get to avoid paying property taxes. That’s after a ruling Thursday by the Illinois Supreme Court.

The tax exemptions had existed for the better part of a century — until about 15 years ago, when a series of court decisions threw them into question. In response to those rulings, the General Assembly passed a law to codify the exemptions in 2012.

Mark Deaton, general counsel of the Illinois Hospital Association, says Thursday's decision upholding the law ends years of uncertainty.

“It really does provide a very clear-cut — almost mathematical — formula, so there’s no question what hospitals have to do under that statute,” Deaton says.

The formula requires hospitals to provide charity care that’s at least equal to the value of the tax exemption. Deaton says that’s been happening — and then some.

“In almost every case, the amount of services being provided far exceeds the value of the tax exemption,” he says.

But some communities have objected, saying that by exempting sprawling hospital campuses from the property tax rolls, it shifts the burden of funding schools and local governments onto every other taxpayer.

But that argument wasn’t before the Illinois Supreme Court in the present case. Instead, the justices found the law was permitted by the Illinois Constitution.

The case is Oswald v. Hamer, No. 122203 (PDF).