A proposed 1% local grocery tax will be discussed by the Naperville City Council for the first time Tuesday as the January expiration date for the Illinois grocery tax inches closer.
For more than a year, city staff have warned that Naperville stands to lose millions of dollars in annual revenue when the state tax sunsets, necessitating a replacement revenue stream to avoid slashing staff and making service reductions.
The tax proposal, which would be instituted through an ordinance amending the city’s municipal code, is up for a first reading Tuesday. A council member could motion to waive the first reading but doing so would take at least six positive votes of the nine-member council, according to city spokeswoman Linda LaCloche.
Should the matter return to council at a later date, it would most likely be on July 15 agenda, LaCloche said.
Naperville’s Financial Advisory Board has recommended that the city move forward with implementing the local tax. If it does, the city would join a host of other municipalities across Illinois that have opted to do the same. In DuPage County, those towns include Clarendon Hills, Downers Grove, Carol Stream, Lombard, Westmont and Wheaton.
The question of whether to levy the tax is falling to local governing bodies because Gov. JB Pritzker signed a bill last year repealing the state’s 1% grocery tax, saying it hit poorer families harder. However, revenue from the sunsetting tax — which applies to food that has not been prepared for immediate consumption, prescription medicines and medicinal appliances, such as wheelchairs or hearing aids — is not kept by the state but returned to municipal governments for local use.
To make up for the lost revenue, municipalities were granted the ability to levy their own 1% tax on groceries. Local governing bodies must approve it by Oct. 1 in order for it to take effect on Jan. 1, 2026, when the state tax ends.
Options for how Naperville could replace the revenue stream were initially brought to the Financial Advisory Board in April. Staff presented two possibilities: adopt the 1% local grocery tax or increase Naperville’s home rules sales tax by 0.25%. Discussion was continued to a special meeting in May, where the board ultimately voted 5-1 to endorse implementing a local version of the state’s repealed tax.
For Naperville, staff estimate lost grocery tax dollars could mean a $6.5 million annual hit to the city’s general fund, which pays for such things as police and fire protection, public works, transportation, engineering and development, according to city budget reports.
Without an adequate replacement, staff from Naperville’s Finance Department have warned the city would have to make cuts, especially to its police, fire and public works departments, which account for the largest share of the general fund.
The Chicago Tribune’s Robert McCoppin contributed.