Lincoln City Council Considers Ordinance to Retain 1% Grocery Tax Amid Revenue Concerns

In the heart of Lincoln, Illinois, city council members gathered on July 15, 2025, to discuss a pivotal decision that could impact the community's finances. The atmosphere was charged with anticipation as they deliberated on an ordinance to implement a municipal grocery retailers occupation tax and a municipal grocery service occupation tax. This tax, currently set at 1%, has been a topic of heated debate, especially in light of recent legislative changes.

City Attorney Hovlett opened the discussion by explaining that a new law passed by the Illinois legislature allows municipalities to retain the existing 1% grocery tax, which was initially set to be eliminated. Many cities across the state have already voted to keep this tax, recognizing its significance as a vital source of revenue. Hovlett emphasized the urgency of the matter, noting that the council must act by September 30 to maintain this funding stream, which amounts to approximately $530,000 annually for Lincoln.

Council members weighed in with varying perspectives. Some, like Mr. Gonzo and Mr. Bateman, argued in favor of retaining the tax, highlighting that it is not a new burden on residents but rather a continuation of an existing tax that supports the city’s budget. They pointed out that the tax primarily affects grocery purchases, which many residents and visitors make regularly. Mr. Bateman noted that the tax translates to a mere $5 on a $500 grocery bill, a small price for maintaining essential city services.

Conversely, Mr. Clemens expressed his dissent, advocating for a break for taxpayers amid rising costs elsewhere. He argued that even a 1% tax could add up and that the council should consider the financial strain on families. This sentiment was echoed by some residents who have voiced concerns about the cumulative effect of various taxes.

The discussion also touched on the broader implications of the tax. Council member Ms. O'Donoghue pointed out that the grocery tax is not solely borne by Lincoln residents; it also applies to visitors from neighboring communities who shop in Lincoln, thereby distributing the financial responsibility more widely.

As the meeting progressed, questions arose about the specifics of the tax, including its application to various food items. Clarifications were made that the tax applies to packaged grocery items, not to food consumed on-site at restaurants or bars.

With the deadline looming, the council faces a critical decision that will shape the city’s financial landscape. As they weigh the pros and cons, the outcome of this vote will not only affect the city’s budget but also the everyday lives of its residents, who are keenly aware of the balance between necessary funding and financial relief. The council's decision will be a defining moment for Lincoln, reflecting the community's values and priorities as they navigate the complexities of local governance.