Mayors suggest grocery tax elimination was for ‘good headline’ in election year

[August 13, 2024]  By Catrina Petersen | The Center Square contributor

(The Center Square) – North suburban Libertyville Mayor Donna Johnson and Algonquin Village President Debby Sosine say that eliminating Illinois’ grocery tax will cost their communities millions in revenue.

The two officials are hopeful that Illinois’ Local Government Distributive Fund, or LGDF, will be restored to 10% of the full individual and corporate tax rates. The LGDF is a fund that distributes money to local governments based on their population in proportion to the state's total population.

In 2011, Gov. Pat Quinn reduced the LGDF rate from 10% to 6%, with the understanding that it would be restored once the state's budget improved. Johnson wanted the Gov. J.B. Pritzker’s office to restore the LGDF before eliminating the grocery tax.

"Please bring us back to the 10% level, or at least make the commitment that over the next three years you’ll increase it by a point getting us to the 10% in three years. Instead they offered gambling sources and dispensary sources, but many communities, including ours, do not allow by ordinance the dispensaries or casinos for many reasons. There’s impacts on children, moral values and what you attract to the community,” said Johnson.

Johnson said Libertyville will see about $850,000 in revenue lost a year.

Sosine said eliminating the grocery tax would cost Algonquin about $2 million in annual tax revenue

"We don’t prefer to go into debt and have deficits, we cut our expenses,” said Sosine. “We would have to cut our police, public works and staff and we would have to take our road and park projects and expand them out. We would not have the funds to do those projects at the rate we are doing, to repair and replace our roads and replace our playground equipment.”

Johnson said while on paper the elimination of the grocery tax looks good, it doesn’t show the whole picture. She said by drying up revenue sources that provide municipalities funds for services to their communities was not the right way to go about providing families with financial relief at the grocery store.

Cook County communities will “survive” the elimination of the grocery tax because they have cannabis dispensaries and casinos, Johnson said.

“They will survive. But for the majority of the municipalities in the Lake county suburbs, those aren’t really options for most of us,” she said. “It might be an option for Cook County and Chicago because they brought in those large casinos, but for communities that don’t want to attract that, it’s not something the whole community supports, it won’t help us. It’s not a viable option.”

Sosine has been going to Springfield for nine years to try to get Illinois to restore the LGDF to 10%. She said restoring that fund would help address the revenue loss created by eliminating the grocery tax.

"It just seems the state does not choose to give the municipality that 10%,” said Sosine. “They choose to keep it in Illinois for their own budget issues.”

Sosine explained the grocery tax was a tax that didn’t go to the state at all, but rather was 100% redistributed to municipalities’ general funds to hire police and firefighters.

The state will eliminate the grocery tax beginning in 2026. Effective immediately, municipalities will have the option to reinstate the tax at the local level without asking voters. Johnson explained that creates an unnecessary adversarial relationship between local officials and their constituency.

“They offered us the option to reinstate it on our own, which makes all of us look very bad as local politicians to our community,” said Johnson.

Johnson thinks the media blitz and public announcement of the grocery tax elimination makes it seem like it was all for a “good headline” in a national election year.