Crystal Lake raises local sales tax on same day voters approve countywide increase

As Cary’s attempts to become a home-rule community failed on election night Tuesday, Crystal Lake officials were flexing their home rule authority by raising the city’s sales tax by half a percent.

Crystal Lake City Council passed the home rule tax increase in a 6-1 vote Tuesday. The tax raise will go into effect July 1.

The city’s vote to impose the additional 0.5% sales tax came on the same day that McHenry County voters backed a new 0.25% sales tax to fund the McHenry County Mental Health Board. With those two increases, Crystal Lake’s sales tax rate will be at 8.5% – the highest in the county. Shoppers in the city currently pay 7.75% total sales tax on general merchandise, which includes the existing local sales tax of 0.75%.

The increased tax, which is estimated to bring in an extra $4,550,000 annually, will help fund the need for more police officers and firefighters, Crystal Lake Director of Finance Jodie Hartman said.

“When you spend $100, we’re asking for an extra 50 cents. That’s what we’re asking for,” Council Member Ellen Brady said.

City staff originally suggested a 0.25% increase, but if the state ends up removing the 1% grocery tax that usually funds local municipalities, as Illinois Gov. JB Pritzker has proposed, the city could lose out on $1.7 to $2 million annually, Hartman said. This loss would make finances tight to fund more public safety officers, officials said. The city also has the looming responsibility to replace $20 million worth of lead pipes within 20 years, Public Works Director Michael Magnuson said.

“The state, when they eliminate that grocery tax, they’ll receive all the glory for taking the tax off our groceries, but they won’t lose a dime in their checkbooks,” Brady said.

The City Council passed the ordinance with a promise to lower the tax by 0.25% at a future date if the grocery tax stays. Hartman predicts the state will make a decision on the grocery tax by the end of May or early June. The next time the city could implement a different sales tax rate is January 2025, she said.

“You can absolutely count on me that if that grocery tax doesn’t go away, we can take it off,” Brady said.

Crystal Lake’s home rule sales tax was first implemented at 0.75% in 2008 and hasn’t been raised since then, according to city documents. The home rule sales tax does not apply to essential items such as groceries, medicine and health care items, nor does it apply to the purchase of titled items such as cars, boats or RVs, Hartman said.

Crystal Lake Police Department hasn’t increased staff numbers for about 30 years, Chief of Police James Black said. The department is looking to hire 10 more officers, which Black estimates to cost the city about $1.5 million over the course of four years. The Crystal Lake Fire Rescue Department hasn’t increased its staffing since 2008, despite receiving about 80% more calls since then, Fire Rescue Chief Craig Snyder said. He is looking to add 12 personnel, which he estimates to be a $1.55 million increase to the budget.

But not all council members were on board with including the half-percentage increase before knowing for sure if the grocery tax will be removed.

“I hate raising taxes. I’m so against this,” Council Member Denise Smith said.

Mayor Haig Haleblian said it’s better to “rip off the Band-Aid,” and he thinks neighboring towns will also raise their sales taxes if the statewide grocery tax is eliminated. “With the state being the state, I would not be surprised to see this grocery tax go away,” Haleblian said. “I think we have to look at this with a real jaundiced eye.”