A house bill passed nearly a year ago will result in an $800,000 hit to the city of Urbana’s budget for the 2013-14 fiscal year. The bill, which qualifies Carle Foundation Hospital for tax exemption due to the charity care it provides, has Urbana Mayor Laurel Prussing on edge for how to compensate for estimated $4.6 million in total losses for the city, including the school and park districts.

Under the bill, SB-2194 passed June 2012, hospitals that give free or discounted services to low-income residents as charity care qualify for tax exemption.

According to an online statement written by Phil Blankenburg, chair of the Carle board of trustees, in 2012, 19,746 people received charity care from Carle hospital, totalling around $32 million in free or discounted care. Carle provided $5.6 million in charity care for 4,400 Urbana residents in 2012.

At a May 20 news conference held by the City of Urbana to discuss the 2013-14 fiscal year’s budget, Prussing said the city and tax payers would be affected by Carle hospital not paying property taxes.  

According to Prussing, Carle serves 25 different counties in Illinois and parts of Indiana, but 83 percent of its property is in the city of Urbana. While Urbana residents comprise only 3 percent of Carle’s patient base, with the hospital’s location primarily in Urbana, the city will take on the biggest financial hit from the tax exemption.

Prussing said that in order to retain the current level of amenities granted to Urbana residents, property tax rates will rise for all other businesses and residents in the city by around 11 percent because of Carle’s exemption. 

“Carle’s shift of its fair share to other Urbana taxpayers puts an unsustainable economic burden on the city,” Prussing said in a letter she wrote and read aloud at a May 6 city council meeting. 

Prussing said the city has already been cutting its budget due to the economy and with the Carle tax exemption, the city may have to cut back even more on city services, including police and fire departments.

While Carol Baker, director of business for the Urbana school district, said the district will see a significant decrease in funding, she said the district does not yet have plans to cut any programs or projects. 

According to data compiled by Mike Monson, Prussing’s chief of staff, the school district is estimated to suffer a $3 million loss. 

The Carle public relations department declined to comment on the tax exemption beyond the statement written by Blankenburg.

In this statement, Blankenburg offers a different side to the story beyond Prussing’s remarks. 

“When you consider the levels of charity care and community benefit, the economic impact of jobs and local spending, and the effect of thousands of people visiting our community each year for health care services, the total benefit to the community far outweighs the property tax exemptions,” Blankenburg said in the online statement. “That’s the true Carle Effect.”

However, Prussing is most concerned with the disparity of the loss between Champaign and Urbana. According to the numbers in Blankenburg’s statement, Champaign was provided with $8 million in charity care in comparison to the $5.6 million provided to Urbana. 

Prussing said she is concerned that the City of Champaign is losing $82,000, approximately 1/10th of what Urbana is losing, while Champaign has around twice the population as Urbana. 

“That just points out the disparity,” she said.

Prussing said that the city knew the tax exemption would have an effect on Urbana in the fall when they were discussing the next year’s budget. However, it wasn’t until earlier this year that the city knew what a serious effect it would have.

State Rep. Naomi Jakobsson, D-103, who voted in favor of the bill with a focus for a tax on cigarettes, filed a new bill Friday, HB-3634, to correct to damage the city of Urbana is facing from the tax exemption. 

The bill says that if a hospital that serves several counties is located in a town where the hospital serves 10 percent or less of the total number of people the hospital serves, then they are not qualified for the exemption. Because Urbana is only 3 percent of who Carle serves, Carle would no longer qualify under the bill.

Jakobsson said that it is not going to be called soon enough to affect the 2013-14 fiscal year. 

Kat can be reached at [email protected].