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Monticello approves 1% municipal grocery tax to replace state levy starting Jan. 1
Summary
The council voted to adopt an ordinance implementing a 1% municipal grocery retailers and service occupation tax to capture revenue the city expects to lose when the state grocery sales tax is eliminated beginning Jan. 1.
The Monticello City Council on Sept. 8 approved Ordinance 20 25-63 to implement a 1% municipal grocery retailers and grocery service occupation tax that will take effect with the State of Illinois change to grocery taxation on Jan. 1.
City staff said the State of Illinois is eliminating its grocery sales tax effective Jan. 1 and municipalities may file with the Illinois Department of Revenue to levy a local 1% grocery tax on eligible grocery items; staff estimated the city could lose roughly $200,000 of state-shared revenue and cited a neighboring municipality’s estimate of about $300,000 as a rough comparison. The ordinance must be filed with the Illinois Department of Revenue on or before Oct. 1 to take effect on Jan. 1, according to staff remarks.
Council members debated whether to delay implementing the tax for a year to “give constituents a free year” versus adopting it to replace shrinking state-shared revenue streams. Supporters said the tax is effectively a reallocation of an existing 1% grocery levy—from the state to the city—so residents would not pay a new charge, and that the revenue would help offset declines in other state-shared funds. Opponents said even small new local levies are sensitive politically; the meeting record shows several members questioned impacts and alternatives, and one member asked whether the city—non-home rule—could instead raise taxes on other items such as alcohol or tobacco (staff said that generally would require different authority or a referendum for non-home rule communities).
During roll call, some votes recorded in the transcript include: Whittem — Yes; Carey — No; Lively — No; an unidentified council member recorded as Yes; Broderick — No; Yoon — Yes; Reed — Yes. The ordinance was recorded as passed in the meeting transcript.
Staff framed the measure as a way to preserve local services and fund downtown and other city priorities in the face of declining state distributions; the council did not attach conditions when it voted. The council record indicates this action is contingent on state filing and future collection and administration by the Illinois Department of Revenue.
