Urbana Resolution to Challenge Carle Tax-Exempt Status

The Urbana City Council is expected to take its first vote next week on a resolution opposing Carle Foundation Hospital’s tax-exempt status.

The measure seeks a legislative solution requiring the hospital to ‘pay its fair share’ in property taxes, opposing a law that passed in 2012 that gives tax-exempt status to hospitals that provide charity care.

Mayor Laurel Prussing said the tax exemption for Carle Foundation Hospital hurts the city, because more than 80 percent of the hospital’s property is in Urbana.

Prussing said the state law enacted last year runs counter to an Illinois Supreme Court ruling that said another hospital, Urbana’s Provena Covenant, did not spend enough money on charity care to qualify for tax exempt status.

“I think the whole issue of what is a not-for-profit, and what is charity, and what is a hospital’s fair share is a huge public issue, especially for the city of Urbana," she said.  "We may have been hit harder than any other city in the state by this state law that was passed last year.”

Alderwoman Diane Marlin said the law is unconstitutional, noting that it demands too much from one city.

“The cost of regional charity care should not fall mostly on the shoulders of Urbana residents," Marlin said. "It’s just not sustainable. Citizens cannot afford the increase in property taxes that are going to result.”

A statement from Carle defends its charity care program, and said its economic impact in the community outweighs the property tax exemptions.

Mayor Laurel Prussing says Carle’s tax exempt status will force the city to raise property taxes by 11-percent, making it more challenging for the community to grow.

Prussing added that she is considering a court challenge to the law, noting Urbana makes up only 3-percent of Carle’s service population.

A final vote on the resolution would come in two weeks. Prussing said the Champaign County Board may pass a similar measure.