The Aurora City Council, amid talk of budget concerns, has agreed to locally extend a grocery tax set to expire statewide at the end of the year.
Aurora is already facing a nearly $30 million deficit in the 2026 budget, which is currently being developed, according to city officials. The grocery tax expiring would have only added to the problem, officials said.
The 1% tax on groceries provides Aurora with around $4.5 million in revenue each year, which helps pay for public safety, road maintenance, public works, community programs and environmental services, according to past reporting. Officials have said that, if the tax were to expire, the city would likely need to find alternative funding sources or make cuts to services.
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. Those who receive benefits from the national Supplemental Nutrition Assistance Program, also called SNAP, do not pay the tax.
Illinois first put in place the grocery tax in 1990 to help fund local governments. It was repealed by a state bill passed last year, but the bill allowed cities and villages to set their own tax to replace the statewide one.
Communities have until Oct. 1 to ask the state to continue locally collecting the 1% grocery sales tax on their behalf, which would take effect on Jan. 1, 2026, just after the tax expires statewide. Many nearby communities have also approved local extensions of the tax, including Naperville, Montgomery, Sugar Grove, North Aurora, Batavia, Geneva and St. Charles, as have others throughout the Chicago area and the state.
On Tuesday, the Aurora City Council voted 7-5 to continue collecting the tax.
Voting in favor were Alds. Daniel Barreiro, 1st Ward; Carl Franco, 5th Ward; Mike Saville, 6th Ward; Javier Banuelos, 7th Ward; Patty Smith, 8th Ward; Edward Bugg, 9th Ward; and Will White, at large.
Voting against were Alds. Juany Garza, 2nd Ward; Ted Mesiacos, 3rd Ward; Jonathan Nunez, 4th Ward; Shweta Baid, 10th Ward; and Keith Larson, at large.
Though Mesiacos said his family likely can afford to continue paying the grocery tax, he spoke and voted against it because of the need he has seen within his ward. He already often sees long lines at the Marie Wilkinson Food Pantry, he said.
Lots of people have been feeling the strain of rising grocery costs as wage increases on average lag behind, according to Larson. He said many residents have reached out to him saying they don’t want the grocery tax to continue, and he wanted to represent them by voting against it but also to be realistic.
Since the grocery tax has already been in place, the vote was really to decide where the city would be generating $4.5 million, not if it would be getting that money in the first place, Larson said. Without the grocery tax to generate that revenue, it would likely mean higher property taxes, which could have an impact on rents, he said.
Franco said residents had no problems paying the grocery tax before this year, and now, residents are only talking about it because the topic has come up. Plus, the math shows that the city is currently not in a position to stop collecting the tax, he said.
Other aldermen also referenced the city’s financial state, which was presented earlier in the meeting, when arguing for voting in favor of continuing the grocery tax. Saville said he shares staff’s concern about the 2026 budget, and noted that it was going to take work to fix, including making hard decisions.
At the end of staff’s presentation on the city’s financial state earlier in the meeting, Smith said she felt backed into a corner about the grocery tax.
Aurora Mayor John Laesch has been talking about the city’s financial state since at least his inauguration speech in May, and he said at a town hall meeting last month that the city is facing a “significant hole” between revenue and expenses in 2026 based on early budget analysis.
Early work on the 2026 budget has found a $29.7 million gap between expenses and revenue in the city’s general fund, according to a presentation by Aurora Chief Financial Officer Stacey Peterson at Tuesday’s Aurora City Council meeting. Not included in that nearly $30 million figure is the additional $10.3 million in funding requested by departments as a part of the budget process or any increases to contracts with various unions that are expiring, among other possible expenses.
Brian Caputo, who left the city in 2017 after roughly 20 years of service but is set to come back in early September, said during the presentation that the current financial situation is one of the most serious ever faced by the city, as far as he is aware, and is more severe even than what the city faced during the Great Recession.
Caputo formerly served as the city’s city finance director, and Laesch said he will soon be rejoining the city as “director of fiscal integrity and organizational management,” a role planned for the mayor’s office.
It isn’t just that the current budget gap is bigger than it was in the past, Caputo said. This time the situation isn’t temporary, and many revenue streams are actually doing well, he said.
Instead, expenses have outpaced revenue, but past budgets have been balanced by moving money typically set aside for long-term needs like insurance and capital projects into the city’s main operating fund, called the general fund, according to Caputo. What that means is that the “fundamental financial structure of the city … does not work as it is currently set up,” he said.
Aurora now is looking to put into the 2026 budget $3.3 million for the Compensated Benefits Fund, $3.8 million for the Property and Casualty Insurance Fund and $9.4 million for the Capital Improvement Fund, amounts taken out of previous budgets in an effort to balance them, Peterson’s presentation showed.
To fill the gap, city officials are going through the budget line-by-line looking for places to cut and will continue to look for ways to make operations more efficient, according to Laesch. He said the city has also stalled new hires and is already cutting back on positions that are not needed.
September will likely be “intense” as officials look to close the gap, he said.
Aurora will be looking at other sources of revenue later in the year, but just like how the problem won’t be solved with all cuts, it also won’t be solved with all new revenue, either, Laesch said. Many aldermen noted large development projects that are set to come online soon could provide a boost to city revenues, though Laesch said some of those have tax sharing agreements so the city will not get the full amount.
The Aurora City Council has also voted to double the city’s hotel tax starting in the new year, the first time the tax has risen since it was put in place. However, that won’t have a direct effect on the general fund, according to Peterson, as the extra revenue from that tax has been pledged to help pay the city’s debt payments.
And as for the city’s property tax, Peterson has said that it would likely be going up if only to pay for the city’s debt service as well as pay for police and firefighter pensions.