Urbana Mayor Proposes Tax Hike, Vows To Fight Tax Exempt Law

Urbana Mayor Laurel Prussing calls a proposed one quarter-percent sales tax hike just one way of bridging the gap as the city looks to make up for a loss in revenues.

Prussing said state law change impacting Carle Hospital’s tax-exempt status means a loss of more than $830,000. 

She said Health Alliance has proposed hiking the cost of health insurance for city employees is expected to go up nearly $350,000 - meaning Urbana faces a $1-million funding shortfall. 

Prussing says she doesn’t expect her plan to face opposition - since the proposed quarter-cent tax will bring the local sales tax to 9-percent, the same level it will be at in Champaign as of January.  The tax would not apply to food or medicine, or big ticket items like cars.

Meanwhile, Prussing said it will take a legislative effort and legal fight on the part of the city to change the state law – which now states if a hospital’s charity care is more than their property taxes, they deserve a tax break:

“83-percent of Carle’s property is in the city of Urbana, yet they serve a huge region of 25 counties in Illinois and Indiana with over 1-million people," she said.  "And we’ve only got 41,000 people, so that means 41,000 are being asked to pick up the tab for the “charity care.” 

Prussing said she had the chance to question U.S. Health and Human Services Secretary Kathleen Sebelius during a conference call about the expansion of Medicaid under the Affordable Care Act, and how that would impact hospitals.

"She said that we should keep an eye on their uncompensated care because that's going to go down," she said.  "They're going to get more paying customers and she said that there's no reason that hospitals shouldn't pay their fair share of property taxes."

Prussing says Urbana State Representative Naomi Jakobsson has introduced legislation to end tax breaks for hospitals in communities the size of Urbana.

The Champaign County Chamber of Commerce has asked its members to reach out to Urbana aldermen to oppose the sales tax hike.

The Urbana City Council Committee of the Whole meeting starts at 7 p.m. Monday at the Urbana City Building.