Council discusses retaining municipal grocery retailer occupation tax; action scheduled for next meeting

City staff briefed the council on whether to retain the municipal grocery retailer occupation tax, a local 1% charge that municipalities in Illinois can keep after the state removed its grocery tax, and recommended retaining the status quo. The staff presentation said the state legislature let the state grocery tax expire and that municipalities must decide whether to keep the local portion; retaining the local 1% would not change rates for residents if retained.

Merritt and other staff explained that the tax has two parts (grocery retailers and grocery services) to capture different purchase channels and said the city would continue to collect roughly the same revenue if the council retained the tax. "This is retaining revenues that we have currently," a staff member said, noting neighboring communities such as Plainfield, Romeoville and Shorewood have kept the tax.

Council discussion balanced two themes: fairness and local revenue. One councilmember said a tax that non-residents pay is attractive because it brings outside shoppers' dollars to infrastructure costs; another said that if the council were to give money back, a property-tax reduction would more directly help local residents. Several members warned that giving up the tax would require cuts to services because the revenue funds internal city functions.

No final vote was taken. Staff asked that the ordinance (Ordinance 25-008 as referenced in materials) be placed on the next city-council agenda for action so councilmembers could vote on whether to retain the tax. City staff confirmed one councilmember had asked for clarifications on sections 2 and 3 of the draft ordinance and that the IML model ordinance language was being followed to address both the retailer and services components.