Aurora council votes to continue 1% grocery tax as finance officials warn of $29.7 million 2026 shortfall

Aurora — The Aurora City Council voted 7–5 on Aug. 26 to continue a 1% municipal grocery retailer’s occupation and service occupation tax after City finance officials told the council the general fund faces a projected shortfall for fiscal 2026.

CFO Stacy Peterson told the council the city’s estimated general fund revenue for 2026 is $231,500,000 and estimated expenditures are $261,200,000, “which gives us a deficit of approximately $29,700,000,” not including department decision packages that total about $10,300,000 if approved.

That shortfall, Peterson said, does not reflect the potential loss of the grocery tax; staff estimate continued collection of the 1% grocery tax would produce about $4,500,000 annually. Shannon Cameron, the city’s chief of staff and corporation counsel, told the council the state will continue to collect the tax on the city’s behalf only if the city notifies the state by Oct. 1, 2025. If Aurora opts out after that date, staff said the city would need to adopt and administer its own tax-collection system.

Nut graf: The vote was framed by council members as a trade-off between immediate revenue stability and the burdens of an extra cost on grocery purchases for residents. Supporters argued the tax continuation is needed now to prevent deeper cuts and potential pressure on property taxes and services; opponents said it is an added cost for households already coping with inflation.

Most important facts: Finance staff listed several contributors to the structural gap, including restored transfers to internal funds, ongoing operating costs that followed one-time ARPA spending, anticipated contract increases for unions and unresolved labor negotiations, and a proposed fire station staff decision package.

“Do we have en masse unmarked police vehicles going out? … We need to protect our most—the people that are at most risk in this community,” said public commenter Andrew Tripp during public comment, a separate agenda item. (Public comment is summarized elsewhere.)

Finance details and context: Peterson said city decision packages requesting new or expanded services (each typically $5,000 or more) total about $10.3 million. She identified a new fire station (Station 13) staffing decision package that would add 12 personnel with salary and benefits of about $1,100,000. Peterson also named potential labor-contract impacts, estimating roughly $3,250,000 if outstanding negotiations settle at levels comparable to recent contracts. She noted that home-rule sales-tax transfers historically shifted funds from capital to the general fund; those adjustments have been used in prior years to balance budgets but reduce capital capacity.

Brian (Dr.) Caputo, identified in the meeting as the incoming director of fiscal integrity and organizational management, framed the shortfall as structural rather than temporary. “The $29,000,000 general fund gap…is before decision packages,” Caputo said, adding the city has in prior decades redirected funds to cover temporary shortfalls but “this situation here is much more severe.”

Council debate: Aldermen split over the value and fairness of continuing the tax. Supporters, including Aldermen Seville and Smith, said approving the state-collected continuation now would shore up the budget and avoid deeper cuts. Alderman Seville said the council must “act” to preserve the city’s fiscal position. Opponents, including Aldermen Larson, Mesiakos and Nunez, said the city should prioritize protections for low-income residents and not add a regressive cost on groceries.

Alderman Smith, supporting the tax, emphasized exemptions: “We are not imposing a new tax on our residents. We are just continuing a tax that has been a tax since 1990… It is not imposed on people who have food stamps,” she said during debate.

Roll call and motion: Alderman Franco moved adoption of the ordinance (file 25‑0‑5‑1‑9), seconded by Alderman Seville. The roll call vote was: Yes—Franco, Seville, Benuelos, Smith, Buck, White, Barrero (7). No—Garza, Maciakos, Nunez, Bade, Larson (5). The mayor announced the motion carries.

What it means next: Per statements from city staff, if Aurora opts in by Oct. 1 the state will collect the 1% grocery tax for the municipality; if the city misses that deadline, the city could still adopt a grocery tax later but would have to establish a local collection and enforcement mechanism. Several council members said the dais could later propose legislation to sunset the tax if fiscal conditions improve.

Budget options and timing: Staff outlined potential balance actions under active consideration: line‑by‑line cuts, delaying or scaling capital projects, hiring freezes (the city noted a pause on hiring for several positions and recent eliminations), and transfers between funds. Peterson said the general fund’s estimated fund balance as of July was about $16.8 million. She also cautioned that some funds (property and casualty insurance, compensated benefits, etc.) have liabilities that require continued funding.

Ending note: Council members urged continuing the dialogue and additional analysis—several asked for multi‑year forecasts and more detail on vacancies and capital projects as they finalize the 2026 budget. The council set a practical deadline to act on the grocery-tax continuation because of the state Oct. 1 notification requirement.