The Naperville City Council will vote next month on increasing the city’s sales tax to compensate for the loss of about $6.5 million in state grocery tax revenue.
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If implemented, escalating the home rule sales tax from .75% to 1% will generate about $6.57 million in new money but comes with the proviso that the increase be removed in two years. The tax would add 25 cents to every $100 spent on restaurant meals and store purchases, affecting items such as clothing, electronics and personal care products.
It also means that the food and beverage tax patrons pay at downtown restaurants and bars will go down by .25%, per requirements included in city ordinances that dictate that if the home rule tax goes up, the downtown food and beverage tax must go down by the same amount. The current tax is 1.75%.
The proposed adjustment was not universally supported by the council at the Tuesday night meeting. Members Josh McBroom, Allison Longenbaugh, Nate Wilson and Mayor Scott Wehrli said they preferred a local grocery tax.
Last year, Gov. JB Pritzker repealed Illinois’ 1% grocery tax, saying it hit poorer families harder than others. However, because revenue from the tax goes directly to municipal governments rather than to the state government, towns were granted the ability to levy their own 1% tax on groceries by Oct. 1.
Some neighboring communities, including Wheaton and Plainfield, have opted to do that while others are still discussing their options.
Naperville Finance Director Raymond Munch noted that the grocery tax and the home rule sales tax currently bring in about the same amount of revenue, but the local grocery tax is a more stable form of revenue.
Council members who preferred the sale tax increase said they believed a lower grocery tax would be of greater benefit to Naperville residents with lower incomes.
“We have seen in the community there have been people who have been at the grocery stores every week — hundreds, thousands — shopping for groceries every week,” Councilman Ashfaq Syed said. “I have not seen that at shopping malls or for dining.”
Councilman Ian Holzhauer agreed.
“I think the one of the strongest arguments for the grocery tax is actually also one of the strongest arguments against it, which is that it provides revenue stability during periods of economic slowdown,” Holzhauer said. “That means in times when a lot of people are losing their jobs … the only thing they can afford to buy that week is their food.”
City staff noted that low-income people who receive assistance through the Supplemental Nutrition Assistance Program, or SNAP, would not pay the grocery tax but would feel the impact of a bump to the home rule sales tax.
For Holzhauer, however, recent cuts to SNAP through President Trump’s tax bill are part of why he supports a home rule sales tax increase since he says more people will likely lose their SNAP benefits soon.
Council members Mary Gibson, Benjamin White and Patrick Kelly were also in support of the increased home rule sales tax.
Longenbaugh echoed comments she made at a previous city council meeting, emphasizing that she does not like the “regressive” nature of either tax. She ultimately voted for implementing a local grocery tax.
“It’s been on our receipts since the 1990s,” Longenbaugh said, referencing the year the tax was put in place. “We’ve been seeing this on our grocery store receipts for this long. It doesn’t necessarily make it right, but it’s something that we are familiar with already.”
The council action is counter to the position taken by the Naperville Financial Advisory Board, which voted 5-1 in May to recommend the adoption of the grocery tax over increasing the home rule sales tax.
Local business leaders also expressed opposition to the sales tax hike at the Tuesday meeting.
“Our current sales tax rate is nearly 3% lower than many neighboring communities,” Kaylin Risvold, president and CEO of the Naperville Area Chamber of Commerce, said. “An increase in the home rule sales tax would erode or eliminate this advantage, making Naperville less competitive for businesses.”
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