The Aurora City Council pushed back a vote to extend a 1% grocery tax that has been in place statewide for decades but is set to expire at the end of this year.
Illinois first put in place the grocery tax in 1990 to help fund local governments, but it was repealed by a state bill passed last year. However, that bill allowed cities and villages to set their own tax to replace the statewide one, which Aurora is considering doing.
The tax came before the Aurora City Council for final approval on Tuesday, but aldermen unanimously voted to delay it until late August so that they could have more time to learn about and consider the city’s financial state.
Aurora receives around $4.5 million in revenue through the grocery sales tax each year. Without those funds, which help pay for public safety, road maintenance, public works, community programs and environmental services, the city would likely need to look to alternative funding sources or make cuts to services, Chief Financial Officer Stacey Peterson previously said.
City officials, especially Mayor John Laesch, have been saying the city is in a difficult financial state. During his inauguration speech in May, he said that the city is in “serious debt,” that his administration needs to get the city’s “financial house in order” and that residents will likely be seeing a property tax increase.
And while some aldermen have said that continuing the tax that has been in place for the past 35 years so the city can get millions of dollars each year doesn’t feel like much of a stretch, others have their reservations.
Ald. Patty Smith, 8th Ward, said at Tuesday’s meeting that she thinks many aldermen are struggling with the tax now that the state has handed over control to local governments, and she doesn’t personally know where she stands on the issue.
Gov. JB Pritzker, who signed the bill, has said the statewide grocery tax hurts poorer people in particular because it takes a larger chunk of their income, according to reporting from the Chicago Tribune. Many aldermen have echoed Pritzker’s comments on the tax both before and at Tuesday’s City Council meeting.
The city is putting a large burden on its taxpayers, especially since it also just raised water bills, said Ald. Javier Banuelos, 7th Ward. While he agreed that the vote should be pushed back since he wanted to look at the issue further, he said that he would have voted no if the vote happened at that meeting.
Ald. Juany Garza, 2nd Ward, said she has gotten many calls and emails about the grocery tax in the last few weeks. People aren’t happy about it, and they want relief, she said.
“One percent or half a percent, it doesn’t matter. It’s taxes, and people, they don’t feel comfortable with it,” Garza said.
The city needs to look at other funding options, she said, not just put the burden on residents.
Rick Lawrence, a former alderman, made similar complaints during the meeting’s public comment period. He said the $4.5 million in revenue brought in by the grocery tax makes up a small percentage of the city’s revenue, and that the city should be able to figure out how to deal with that lost revenue without impacting low- and middle-income residents.
If the city loses the grocery tax revenue, it won’t just be stopping planned capital projects, according to Laesch. He said significant cuts to staff would also be needed.
Aurora is already facing budget shortages, said Ald. Edward Bugg, 9th Ward, especially since the city’s population was undercounted in the 2020 census. City officials have said that perceived undercount is costing the city $4.3 million each year.
The city is already making cuts, such as by not filling open positions and by stopping capital projects that are not absolutely required, Laesch said.
City staff presented Laesch with other funding options, but he chose the grocery tax since it was already in place, not an actual increase like the other options, according to Laesch. Ald. Carl Franco, 5th Ward, said City Council should get a presentation on other ways to fill the funding gap left by the expiring statewide grocery tax.
The grocery tax only applies to food that is bought and then taken to a different location to be prepared and eaten, which is not covered under the city’s Home Rule Sales Tax rate of 1.25%, according to a staff report about the grocery tax included with the Tuesday meeting’s agenda.
Food that is to be eaten immediately, such as restaurant food, is taxed at the regular sales tax rate of 8.25% plus the Food and Beverage Tax rate of 1.75% for a combined rate of 10%, but is not impacted by the grocery tax, staff said in the report.
Plus, the grocery tax does not apply to those who receive benefits from the national Supplemental Nutrition Assistance Program, also called SNAP. However, after the Trump administration’s megabill was passed and signed on July 4, many SNAP recipients may receive lesser or no benefits in the near future.
Area elected officials recently criticized that federal tax and spending bill, saying it would hurt local residents.
Cities and villages have until Oct. 1 to let the state know if they would like to locally continue the 1% grocery sales tax, which would take effect on Jan. 1, 2026, just after the tax expires statewide. Many nearby communities have already approved local extensions of the tax, including Montgomery, Sugar Grove, North Aurora, Batavia, Geneva and St. Charles, as have others throughout the Chicago area and the state.
Naperville, in contrast, is considering increasing the city’s sales tax to compensate for its lost state grocery tax revenue, according to the Naperville Sun.
The Aurora City Council should decide on the tax by its Sept. 9 meeting at the latest, Peterson said, so staff have time to let the state know about the decision. The item is set to be considered again at the Aug. 26 City Council meeting.
rsmith@chicagotribune.com
