Marshfield Officials Still Hope to Reach Out-of-Court Settlement With Marshfield Clinic Regarding Taxes

Friday, October 8th, 2021 -- 12:00 PM

(Mike Warren) Marshfield officials still hope to reach an out-of-court settlement with Marshfield Clinic, concerning the health system’s claim for tax-exempt status for its main building and adjacent East Wing.

Marshfield Clinic Health System claims it is entitled to tax exemption for its properties at 1000 and 1001 North Oak Avenue. because the two facilities are “used exclusively for the purposes of any hospital of 10 beds or more devoted primarily to the diagnosis, treatment or care of the sick, injured or disabled.”

“There have been some very informal and unofficial talks, and to date they have borne no fruit,” District 5 Alder Ed Wagner told Hub City Times during an Oct. 7 interview.

“There is no framework for what a settlement would look like.” City Administrator Steve Barg said via e-mail that, “Publicly there is really nothing to report, nor are there any agenda items on the docket currently for upcoming meetings on the city’s end.”

Marshfield Clinic initially sent a tax-exemption request to the city Feb. 27, 2020, and the city denied the request May 18 of that year. Marshfield Clinic followed with a lawsuit, which was filed in Branch Three of Wood County Circuit Court on July 13, 2021.

The issue was on the common council’s closed-session agenda that evening. “I haven’t looked closely at how the city might cover the loss of revenue should the clinic win its tax claim, mainly because we would expect this process to take some time (many months, at the very least), so it won’t have an immediate impact,” Barg added.

In order for Marshfield Clinic to seek tax exemption, the health system first had to pay its property taxes, which had been done as of July 31. The clinic is now technically seeking reimbursement for those payments, in addition to exemption moving forward.

According to Barg, “If we lose $112 million in assessed value, the tax impact to the city would be a decrease of about $1.1 million per year, or approximately 7.5 percent of our annual tax revenue. As a result, a tax rate increase of roughly that same percentage would be necessary to make up the difference. As this is unlikely, the solution would almost certainly include a combination of tax increases and budget cuts; however, no specific cuts have been identified at this point.”

“We feel their claims are not justified,” said Wagner, who the clinic specifically sought out to start informal talks between the two sides. “If the clinic won its case tomorrow, and the city sought to make up the entire difference through a tax rate increase, the city’s tax rate would need to be increased from its current $10.25 (per $1,000 of assessed value) to $11.02,” Barg explained.

Under that scenario, the owner of a $100,000 home would pay an additional $77 per year in real estate taxes. The two sides have resolved past tax-exempt debates with a “PILOT,” or “payment in lieu of taxes,” in which Marshfield Clinic paid the city a pre-determined amount of money instead of annual property taxes.

“I can’t see any alderman who would voluntarily say ‘We’ll take a PILOT, and we’ll exempt you for the rest of your life.’” Wagner added. “The city is the only one who gets anything out of the PILOT payment. All the other entities (School District of Marshfield, Mid-State Technical College district, Wood County and the state) are left with a loss.”

When asked what his reaction would be if Marshfield Clinic offered to pay real estate taxes on one building if granted exemption for the other, Wagner stated, “That would be really nice if they would do that. It would be something that I would want to discuss. “I’m trying to do a job as a good steward of the public’s money, and there are days when it’s like trying to push a string uphill.”

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