School districts owe nonprofit hospitals millions in property taxes
By Erin Gallagher Correspondent March 5, 2013 6:34PM
Updated: April 7, 2013 6:20AM
The state’s recent approval of some hospitals as nonprofits means that government agencies — especially schools — are now on the hook to refund taxes to the hospitals going back five years.
And that’s going to cost them millions.
Valley View School District, which covers Romeoville and Bolingbrook, must pay Adventist Hospital between $4.5 million to $5 million, according to Larry Randa, community relations director. Although Adventist CEO Rick Mace said in a statement that it paid taxes in protest and worked with county leadership since 2008, Randa said, the first Valley View heard about the issue was a couple of weeks ago.
In the case of Plainfield School District 202, it owes Naperville’s Edward Hospital $1 million it hadn’t budgeted, district spokesman Tom Hernandez said. That figure is on top of the approximately $1.7 million projected deficit after the district already cut $8 million since September.
“When you roll it all together, we’re at the bottom of the hill again,” Hernandez said.
Plainfield is in discussions with Edward about payment terms and planning. The hospital has been cooperative with the school district, Hernandez said.
“All we’re saying is, ‘holy cow, it’s going to cost us a million bucks,’” he said.
In order to qualify for tax-exempt status, nonprofit hospitals must prove they provide charitable services equal to or greater than the amount of taxes owed.
Statewide, schools have seen an extreme decrease in state funding in recent years. For example, in Valley View, general state aid, which does not include reimbursements such as transportation, has gone down about 30 percent in the past five years, Randa said.
Ultimately, schools are getting creative with cutting budgets, trying not to cut programs. Students should continue to expect fewer staff, such as aids, and larger classrooms.
The Will County Board’s finance committee agreed on Tuesday to repay the $450,000 the county owes out of reserves from last year’s budget. Republican Caucus Chairman Jim Moustis, R-Frankfort Township, said perhaps county officials should ask the hospitals to waive the repayments or donate the money to the county’s health department.
“We should see if there is some room there (to negotiate) and we can work something out,” he said.
Herald-News writer Cindy Wojdyla Cain contributed to this report.