Letter: Taxing Residents in Anticipation of Returning Money to Elmhurst Memorial Hospital is Unfair
Alderman Diane Gutenkauf says there are many options available—other than taxing residents—to repay the hospital if it regains tax-exempt status.
On Monday, Dec. 5, the Elmhurst City Council voted on the fiscal year 2011 tax levy.
The council was presented with a majority report from the Finance and Council Affairs Committee that proposed a tax levy in the amount of $9,236,942. This amount represents an increase of 4.5 percent over the 2010 levy amount. We were also presented with a minority report proposing a lower levy of $9,034,614, representing an increase of 2.25 percent over what we levied in 2010.
Both reports included an argument that the City Council must account for a change in the tax status of Elmhurst Memorial Hospital. Due to state regulators reclassifying the hospital as a for-profit entity, the land they own will appear on our tax rolls valued at approximately $38 million. They will pay property tax based on this combination of tax status and valuation. The hospital has appealed the ruling and anticipates a return to nonprofit status in the future. Both FCA Committee reports proposed increasing the tax levy with the anticipation we will be required to repay the hospital any tax we collect. The exact amount we would owe the hospital depends on the final tax rate, but it is approximately $198,000.
At Monday's council meeting, I argued extensively that taxing all residents to anticipate returning money to the hospital was unfair. We have many options should this repayment be required. For example, we could tap our line of credit, find the money in our general fund or revisit our tax levy amount in FY2012. I believe that raising the tax levy amount at all is a tax on all citizens, even though the levy would be spread out over more payers once the hospital is included.
When the majority report was placed before us, last night, Alderman (Kevin) York motioned to substitute his minority report with its lower levy amount. I proposed an amendment to that report lowering the total proposed tax levy to 2010 levels of $8,835,952. Should the hospital tax status remain for-profit, taxes would stay flat or even slightly lower for residents since the levy amount would spread across more payers. Should the status revert to nonprofit we would reimburse the tax collected in one of the ways outlined above.
The vote to accept the amendment was tied. Mayor DiCianni broke the tie by voting against my proposal to lower taxes for Elmhust residents. The council then considered the minority report in its original state. If the minority report did not pass, we would have been forced to consider the majority report and its higher tax levy. I chose the lesser of two evils and voted to accept the minority report, thus helping to prevent consideration of the higher property tax proposed in the majority report.
My first choice however, would have been to keep rates flat. Unfortunately, the mayor's tie-breaking vote made that impossible.
— Diane Gutenkauf, 1st Ward alderman