Suburbs face new dilemma with fate of grocery tax in their hands

The Illinois legislature’s decision to eliminate the state’s 1% grocery tax, but allow cities and villages to replace it with a 1% tax of their own, is receiving mixed reviews from suburban leaders.

“The potential is that each town is going to do something different,” Schaumburg Mayor Tom Dailly said. “I just think there’s some people who’ll feel obligated not to do it even though it’s existed for years.”

Dailly, who’s also president of the Northwest Municipal Conference, said he understands the philosophical arguments against a grocery tax, but believes Gov. J.B. Pritzker is seeking to shift the burden onto the local governments that are dependent on its revenues because of other decisions by the state.

“He’s now making those communities the bad guys,” he said.

Hanover Park Mayor Rod Craig, the vice president of the municipal conference and its next president, said he is unsure if his town will enact a grocery tax.

“I don’t know if I can do that,” Craig said. “I’ve been trying to keep our taxes low. It’s going to look like if I pass a tax, that’s a negative. If I pass the tax and others around us do not, it’s going to drive business to other communities.”

Craig believes a conversation about a unified approach will be an important element of his upcoming term as president of the Northwest Municipal Conference.

“I’m a collaborative thinker,” Craig said. “I’m looking for a collaborative solution.”

But Wheaton Mayor Phil Suess, who was completing his final week as president of the DuPage Mayors and Managers Conference when the state budget was approved, believes the provision is a reasonable compromise.

“Having it effective Jan. 1, 2026, is a good thing,” Suess said. “It enables everybody to plan for it, so nobody gets caught with a change in the middle of their budget year. The second thing is that it does give the local communities the ability to impose the tax themselves if they’d like to do that.”

Brad Cole, CEO of the Illinois Municipal League that represents all the state’s 1,294 municipalities, released a statement expressing gratitude for local governments receiving the authority to enact a grocery tax.

“Granting both home-rule and non-home-rule municipalities the authority to generate local revenues — whether regarding groceries or general merchandise sales — provides much needed parity and flexibility for all communities,” he said. “We are grateful for the efforts of all mayors and municipal officials who contacted their legislators about these important issues, and we encourage local officials to use these tools wisely and carefully.”

Cole added the league is working on a model ordinance for municipalities to use in adopting a local tax.

Dailly said that for Schaumburg, the grocery tax brings in about $3.4 million, approximately 6% of its tax revenue. Anything less than $1 million might have been easier to find an alternative for, he added, wondering how Springfield would respond to having 6% of its revenue withdrawn.

A municipality can cut its spending only so far before the reduction in its services and quality of life becomes questionable, he added.

The ideal solution for Dailly would see the legislature restore municipalities’ share of the state income tax back to 10%, up from its current 6.47%. He, Suess and Craig were among about 50 suburban mayors who gathered in Elmhurst last month urging lawmakers to take that step.

The General Assembly declined. The counterarguments from Springfield have been that other sources of revenue have been made available to municipalities in recent years, such as from video gambling and legal marijuana sales, Dailly said.

But Schaumburg receives about $250,000 annually from video gambling and about $1.3 million from marijuana sales. Dailly said he would gladly give all those up in exchange for the restoration of the local income tax share to 10%, which could provide Schaumburg with a $7 million revenue boost.

· Daily Herald staff writer Katlyn Smith contributed to this report.

https://www.dailyherald.com/20240603/local-politics/suburbs-face-new-dilemma-with-fate-of-grocery-tax-in-their-hands/