CHICAGO (CBS) – For the first time, Cook County could soon be collecting property taxes from one of Chicago’s biggest and most successful hospitals.

CBS 2 Chief Correspondent Jay Levine reports that the state’s decision to strip Northwestern Memorial Hospital’s Prentice Women’s Hospital of its property tax exemption could cause a big shift in the local tax burden.

The key word here is potential.

Northwestern Memorial has not decided whether to go to court to challenge the decision of the Illinois Department of Revenue to revoke Prentice’s property tax exemption, arguing it doesn’t provide enough charity care to qualify for the exemption for non-profits.

But Cook County Board President Toni Preckwinkle said she isn’t about to wait.

“The county’s responsibility is to appraise the property and collect the taxes. So we’re gonna do the assessments, collect the taxes,” Preckwinkle said. “But I want it separated from the rest of our tax levy, because I don’t want to be in a position three or four years down the line, where we’ve collected taxes from these folks and we have to give all or some portion back with interest.”

Northwestern Memorial has never paid local property taxes, but the Revenue Department’s decision last week could change that.

Northwestern reports charity care at just 1.85 percent of total revenues – a factor cited in the ruling taking away its tax-exemption. Northwestern officials though say the decision was unfair and arbitrary because there is no official state standard for how much charity hospitals should provide.

It’s also tough for Northwestern to argue it’s really non-profit – with $1.3 billion last year net patient revenues and cash and investments worth $2.2 billion dollars.

“Once it becomes a profit-making institution that protects itself under their tax-exempt status, then it’s a problem. Especially in these days when governments are strapped and taxpayers are strapped,” said Cook County Commissioner Peter Silvestri (R-9th).

Although the ruling only applies to Northwestern’s Prentice Women’s Hospital, that facility alone is a big money-maker and could be assessed at a value of more than $100 million – producing millions in new tax revenue each year.

Prentice is part of the Northwestern system, so CBS 2 News asked people at the hospital – some of them patients, all of them taxpayers – what they thought about it.

Milana Lubin said, “When they have the heavy burden of taxes being placed upon them, they have to cut expenses toward patient care.”

Jack Ehrlich said, “I’m in favor of keeping these institutions financially whole.”

“Our tax exemption permits us to reinvest in the health of our community … provide life-saving diagnostics … research into groundbreaking cures,” a Northwestern spokesperson said Wednesday. “We are proud of our position as one of the top providers of free and discounted care in the state of Illinois.”
Preckwinkle said she plans to set aside the money collected from Northwestern, not spend it, just in case she has to pay it back.

The ruling also took away the tax exempt status from Edward hospital in Naperville and a hospital in Decatur.

There are 53 other so-called non-profit hospitals in Cook County alone.
If their charity spending should dip, they also could have to ante up.

Hospitals aren’t the only large institutions off the hook from property taxes. Universities, churches and governments are all exempt from property taxes.

–CBS 2 Political Producer Ed Marshall contributed to this report.