Determining how much to request in property taxes each year is never an exact science for any taxing body. But this year, a big wild card will come into play.
Hospitals all over Illinois are being evaluated to determine whether they will continue to receive . Elmhurst Memorial Healthcare is one of those providers. If the state determines EMHC provides enough charity care, it will continue to operate as a nonprofit and will not have to pay millions in property taxes to the city, park district, library and school district next year. If the state determines EMHC is a for-profit entity, it will have to pay up.
In addition to the , EMHC operates at a number of other properties in town.
Elmhurst Unit District 205 School Board Tuesday approved its tentative levy based on the assumption that it will receive about $1.4 million in property taxes from the hospital. The proposed tax levy is 4.7 percent higher than last year, which is largely due to that assumption.
"(The York Township) assessor specifically said they will be putting the hospital on the tax rolls this year," said District 205 Assistant Superintendent for Finance Chris Whelton. "They recommend we levy for it."
Under the Illinois Tax Cap, the district is allowed to levy the amount of the Consumer Price Index from the previous year, which is 1.5 percent, plus an amount for new growth.
"The most critical piece of the tax levy is trying to estimate new growth," Whelton said.
The township assessor told district officials to estimate $38 million in new growth from the hospital property, he said. Besides the hospital, any other new growth in town would be from new homes being built, but Whelton said that is probably only about $10 million for the year. To put that into perspective, Whelton said, back in 2007, new growth was nearly $81 million.
The 4.7 percent levy increase is more than the district expects to get once equalized assessed valuation (EAV) and new growth is determined, Whelton said.
"(The township assessor's office) is having a lot of trouble getting estimates to school districts," Whelton said. "It's a general reassessment year, plus declining (home values) have resulted in lots of appeals. They're way behind."
Township officials are indicating the decline in home values is about 8 percent this year, he said.
School District officials always levy high so as not to lose any potential tax revenue, he said. In 2010, for example, the district levied 5.66 more than the previous year based on a CPI of 2.7 percent. What they actually received was 3.51 percent, he said.
This year, "we're projecting it to be more like 3.7 percent," Whelton said.
But the real game changer will be if Elmhurst Memorial Hospital is successful in its bid for tax-exempt status. If that happens, the School District would have to give back any tax money the hospital pays the district. Therefore, while the district may collect $1.4 million from the hospital initially, it cannot plan to spend it.
"We do expect them to apply for tax-exempt status," Whelton said. "They are putting it on the tax rolls, (but) if some point down the line they achieve tax-exempt status, we would have to refund the money. We are concerned about that. We definitely should reserve those funds for that potential."
In fact, only three hospitals in Illinois have had their tax-exempt status overturned and been required to pay property taxes. Edward Hospital in Naperville is one of them, and it is vigorously fighting the ruling.
"The likelihood of Elmhurst Hospital actually entering the tax base of District 205 is very, very small," School Board member Jim Collins said.
By the Numbers
A flat revenue stream is just one of several financial challenges this year. State revenues are falling off—transportation is just one example—and now, thanks to a new state ruling, local districts must pay the salaries and other expenses associated with regional superintendents.
"Expenditures are outpacing revenues," Whelton said. "With a lot of uncertainty and variables with enrollment, different student needs in the district, it is fiscally responsible to levy for (maximum) new growth."
The district is levying in 2011 $87 million for its funds governed by the Illinois Tax Cap. These funds include education, operations, transportation, special education, retirement, social security and working cash. An additional $9 million will be levied in the bond and interest fund, which is not governed by the tax cap, for a grand total of $95.8 million.
Regardless of the levy amount, the district will only receive what the county determines it should receive, School Board President Susan DeRonne said.
"It is what it is," she said. "The only reason we levy more is so we don't lose out on what is coming to us."
Property tax revenue amounts to about 84 percent of all revenue received by the district.
The School District will hold a public hearing on the proposed tax levy Dec. 13.