The city of Aurora is considering extending a 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Illinois first put in place the 1% grocery tax in 1990 to help fund local governments, but it was repealed by a state bill passed last year.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.
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; however, the tax does not apply to those who receive benefits from the national Supplemental Nutrition Assistance Program, also called SNAP, according to reporting from the Chicago Tribune.
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, according to Stacey Peterson, Aurora’s director of financial operations.
Peterson proposed continuing the 1% grocery sales tax within the city at a meeting of the Aurora City Council’s Finance Committee last week.
Aldermen on the Finance Committee voted 4-1 to recommend continuing the tax, and now the proposal is set to go before the Committee of the Whole on Tuesday at 5 p.m. There, all the aldermen on the Aurora City Council will have the chance to discuss the item before it goes officially before City Council next week for a final vote.
Cities and villages have until Oct. 1 to approve the local continuation of 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.
At the Finance Committee meeting last week, Peterson and Ald. Edward Bugg, 9th Ward, stressed that the proposed grocery sales tax would only be a continuation of an existing tax, not a new tax on residents.
According to a staff report about the proposed tax included with the online version of Tuesday’s Committee of the Whole meeting agenda, the grocery tax only applies to food that is bought and then taken to a different location to be prepared and eaten.
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.
The city’s Home Rule Sales Tax rate of 1.25% does not apply to items covered by the grocery tax, the report said.
Mayor John Laesch has been saying that the city is in a difficult financial place. During his inauguration speech in May, he said the city is “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.
Aurora officials also believe that the city has been losing $4.3 million in tax revenue each year because of a perceived undercount of the city’s population in the 2020 census. A special census was planned for this year to hopefully make up for some of that undercount and secure more funding, but it has been postponed.
Last month, the Aurora City Council approved the sale of up to $95 million in bonds for projects that were approved under former Mayor Richard Irvin, some of which Laesch voted against. Those projects included the construction of a relocated Fire Station 9, a new Fire Station 13, the new fire department headquarters building, the RiverEdge Park renovation and the recently-constructed new Public Works facility as well as the roadway improvement project around Farnsworth Avenue and Bilter Road.
That bond issue is expected to have a roughly $9.25 monthly impact on the property tax bill of a $300,000 house, but the city does have the option to use other funds if available to help repay the bonds, Aurora officials have said.
In addition to the continuation of the grocery tax, Aurora is also proposing doubling its hotel occupancy tax rate of 3%. That proposal is also set to go before the Aurora City Council’s Committee of the Whole on Tuesday.
rsmith@chicagotribune.com