Itasca board adopts FY2026 budget and OKs local grocery, non‑home rule sales tax ordinances

Trustee Patrick, chair of the finance and operations committee, outlined May 20 the village's FY2026 budget process and presented three linked actions: final approval of the FY2026 budget, an ordinance to implement a municipal grocery retailer's occupation tax (continuing a tax that the state removed statewide but allowed municipalities to re‑establish), and an ordinance to expand the village's non‑home rule municipal retailer's occupation tax.

Patrick and village staff said the measures respond to longer‑term reductions in state Local Government Distributive Fund (LGDF) distributions to municipalities dating to 2011. The board was told the non‑home rule sales tax increase — raising the village rate from 0.5% to 1.0% under Public Act 103‑078 — is expected to generate roughly $1.4–$1.5 million in revenue in a full year once implemented; staff said much of that revenue is produced by nonresident transactions in the village's manufacturing and office districts. Village staff said the grocery tax is expected to yield about $30,000 annually for the village.

Village administrator Jennifer and finance staff explained that the budget and the tax changes were developed through the capital projects planning process and multiple workshops; the FY2026 budget reflects those decisions and the recommended tax ordinances were included to replace state revenue that had been shifted away from municipalities. "When we looked at the top 20 sales tax providers, a lot of our sales tax is generated within the manufacturing district and in the office district," a staff member said, noting that nonresidents and businesses often bear much of the burden of the increased tax.

After discussion, trustees voted to approve the FY2026 budget and both ordinances at roll call. The grocery tax ordinance continues a tax residents already paid prior to the state's repeal, village staff said; the non‑home rule sales tax ordinance raises the municipal share by a half percentage point and will take effect per state guidance (staff said changes are implemented forward from January 1). Officials said the increase would still leave Itasca with a combined sales tax rate on the lower end among neighboring communities.

Trustees and staff said revenues, including permit fees, sales tax and utility taxes, are trending above budget and that cash reserves are stronger than budget projections for FY2025. The board approved the budget and both ordinances in separate roll calls at the meeting.