Monday, November 30, 2009
Crain's Chicago Business
by Greg Hinz
After all the recent squabbling about whether Cook County does or
does not need President Todd Stroger's full penny-on-the-dollar sales
tax hike, you might think officials would pause before further cutting
the county's income.
Times are tough, don'tcha know? Just about every government on the
planet is scrounging for cash, and most are examining and re-examining
proposals to spend money on special-purpose projects.
But this is Cook County; which leads to the story of how a south
suburban hospital that recently was taken over by a for-profit
investment group is seeking a special property tax break, a break that
would cut its bill a nifty 60%, saving the investors $1 million a year
At issue is a request by operators of MetroSouth Medical Center in Blue
Island, which took over the failing St. Francis Hospital & Health
Center about a year-and-a-half ago from a religious group that
threatened to shut it. Specifically, MetroSouth wants the county board
to approve an ordinance that would apply to it and perhaps one other
facility, the North Side's Weiss Memorial Hospital. The ordinance would
tax the facility at 10% of its market value, rather than the usual 25%,
saving owners a bundle.
MetroSouth has hired a couple of the best gunslingers in town —
attorney Chuck Bernardini, a former county board member, and media
consultant Guy Chipparoni — and they present what on its face is a
Mr. Bernardini says that when the private group took over St. Francis,
it told local officials that it would need "some government help" to be
viable over the long term and received promises of support from Blue
Island and other officials. He points out that the 1,300-employee
facility recently had to lay off 100 workers, and, even with the
proposed tax cut, still would be paying $900,000 to $1.8 million a year
in property taxes — something that St. Francis, a tax-exempt non-profit
facility, did not have to do.
MetroSouth CEO Eugene Beckmann makes similar points.
The facility's New York-based owners have invested $10 million in
upgrades in an area of the county that is starved for jobs and
investment capital, he says, and would like to do more. But "we need a
little help," he argues. "Right now, the reality in this community is
that there are other hospitals which pay no taxes. We will pay taxes.
The only question is how much."
Fair enough. But it's worth noting that the two commissioners who are
sponsoring the tax-break plan, Deborah Sims and Joan Patricia Murphy,
were among Mr. Stroger's staunchest allies in backing his argument that
the county needs every bit of income it can get from the sales tax and
can't afford to make any reduction, even if that tax clobbered a lot of
small stores. But now that an institution located in their part of the
world needs some money, the commissioners suddenly are less interested
in maximizing the county's take.
It's also worth noting that special-purpose laws, which help one
individual or company, usually make for bad public policy —
particularly when well-connected insiders have been hired to secure
passage of such a law.
The county board at the moment appears pretty divided on this proposal.
Suburban Republican Tony Peraica says he'll back the proposal in what
for him is "a close call." City Democrat Bridget Gainer says she's not
swayed and wants time to study the issue. A third member in a key
position, Finance Committee Chairman John Daley, says the matter won't
be on the agenda for his Dec. 1 meeting because it needs more review.
That is the way it should be. One suggestion to Chairman Daley: Since
MetroSouth is kind of pleading poverty (Dr. Beckmann says the facility
now is about breaking even), let them bring in their books and tax
returns and prove the case.
Saving a good hospital for south Cook County is a worthy goal. So is
making sure that county taxpayers don't get a traditional Chicago
fleecing in the process.