SPRINGFIELD — The Illinois Supreme Court on Thursday vacated a lower court’s ruling that found unconstitutional a state law allowing not-for-profit hospitals to avoid paying property taxes in certain cases.
The court unanimously vacated a ruling last year by the Illinois 4th District Appellate Court, determining that court lacked jurisdiction, and sent the case back to the trial court for reconsideration.
The Chicago Tribune reports that the decision from the state’s highest court gave the hospitals a partial victory by keeping the law in place but left undecided the question of the law’s overall constitutionality, a matter the hospitals sought to have resolved.
The case pits the city of Urbana and other taxing bodies against the Carle Foundation Hospital located there. But it has statewide implications: About 156 of Illinois’ more than 200 hospitals are not-for-profit.
The 2012 law allows nonprofit hospitals to avoid property taxes if the value of their charitable services matches or exceeds their estimated tax liability. Some municipalities contend many not-for-profit hospitals are profitable and should be required to pay taxes.
Urbana Mayor Laurel Prussing has said the city lost 11 percent of its assessed property value for tax purposes when Carle and another Urbana hospital were relieved of paying more than $6 million a year in property taxes.
The Illinois Health and Hospital Association has said taxation would force hospitals operating on thin margins to reduce services, lay off staff and delay the purchase of equipment or facility upgrades.