Shoppers in Waukegan’s supermarkets and other food stores will continue to pay a 1% tax on groceries after the first of the year, as the state of Illinois phases out collecting the levy and sending the funds to local governments.
City Finance Director Juan Garcia said last month that under a new state law, Waukegan and other municipalities have to approve the 1% tax by Oct. 1 or they will lose the opportunity in the future. It will not impact shoppers who are already paying it to the state at the cash register.
The Waukegan City Council voted 8-1 to continue the grocery tax at the local level on Monday at City Hall, avoiding a $2 million dip in revenue and a potential reduction of services.
Mayor Sam Cunningham made it clear after the meeting that the council’s action was not a tax increase. Taxpayers statewide are paying a 1% grocery tax. The state collects the money and remits each municipality its appropriate share. Now it will go directly to the cities and villages.
“This is not a new tax,” Cunningham said. “It’s not going to eliminate the grocery tax. It’s going to be coming (directly) to us, not from the state of Illinois.”
Had the council defeated the measure or opted not to act, Cunningham said projected revenue would decrease by slightly more than $2 million. It represents approximately 0.8% of the city’s projected $262.9 million in revenue for the current fiscal year ending April 30.
Though there was no debate among the alders before the vote, members of the council’s Finance and Purchasing Committee talked about it during their Aug. 18 meeting. No vote to recommend or reject the tax was taken. They expressed a desire to get a sense of their constituents’ wishes.
”We’re going to have to find a way to make it up,” Ald. Sylvia Sims Bolton, 1st Ward, said at the August meeting.
Ald. Juan Martinez, 3rd Ward, said that with all the uncertainty surrounding the community, and the cost of groceries steadily increasing, he felt it was better for the city to absorb the revenue loss.
“No one knows what’s going to happen with the tariffs,” Martinez said. “There’s so much uncertainty. (These) There are some very unpredictable times. I feel that with a budget of $292 million a year, we can come up with something to alleviate that.”
When the city approved its current $292 million budget in May, Interim Budget Director Don Schultz said at the time, approximately $29.1 million of cash reserves would be used to balance the difference between estimated expenses and projected revenue.
More than 600 municipalities in Illinois — including 42 in Lake County — voted to add the 1% sales tax so far as the deadline approaches, according to information from the Illinois Municipal League.
Though Waukegan joined Zion and North Chicago in approving the tax, Gurnee chose to increase its entire home rule sales tax by 0.5%. Cunningham said he is not worried Waukegan shoppers will drive west to pay a percentage point less for groceries.
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“I don’t see that being an issue to us at all,” he said. “The sales tax increase has a much bigger impact.”
Voting for the grocery tax were Bolton, Ald. Jose A. Guzman, 2nd Ward, Ald. Victor Felix, 4th Ward, Ald. Edith Newsome, 5th Ward, Ald. Keith Turnner, 6th Ward, Ald. Michael Donnenwirth, 7th Ward, Ald. Lynn Florian, 8th Ward and Ald. Thomas Hayes, 9th Ward.
Other Lake County towns approving the 1% grocery tax as of Sept. 15 include Antioch, Bannockburn, Deer Park, Deerfield, Fox River Grove, Grayslake, Hainesville, Hawthorn Woods, Highland Park, Highwood, Island Lake, Kildeer, Lake Barrington, Lake Forest, Lake Zurich, Lakemoor, Libertyville, Long Grove, Round Lake, Round Lake Beach, Third Lake, Vernon Hills and Volo.
Towns located in both Lake and Cook counties approving the measure include Barrington, Arlington Heights, Buffalo Grove and Wheeling.
The Lake County Board’s Financial and Administrative Committee decided Aug. 28 not to charge the tax in the unincorporated portions of the county.