Cary board moves to continue grocery tax, considers 1% non‑home‑rule sales tax for infrastructure

Nick, village administrator, told the Committee of the Whole on July 15 that state legislation passed in mid‑2024 removes the statewide grocery sales tax starting Jan. 1, 2026 but gives municipalities the statutory ability to enact or continue a local grocery tax thereafter.

“Starting 01/01/2026, the grocery sales tax will be removed, for all municipalities,” Nick said while briefing trustees, and he explained that the village is seeking to continue the local grocery tax rather than allow the revenue to lapse.

Why it matters: staff said the grocery‑tax continuation is not a new levy but a preservation of current local revenue streams. The village’s finance presentation estimated an approximate loss to the general fund of $200,000 in the current fiscal year and about $600,000 in subsequent years if the tax is not continued.

Nick also presented a proposal to enact a new non‑home‑rule local sales tax of up to 1% for general revenue to fund capital and infrastructure needs, notably roads and sidewalks. He said the Illinois Municipal League secured authority for non‑home‑rule municipalities to implement a local sales tax through recent legislative action, and that an adopted ordinance must be filed with the Illinois Department of Revenue no later than Oct. 1 to take effect Jan. 1, 2026.

Staff estimated the 1% general sales tax could generate roughly $750,000 annually for the village, though the presentation noted that estimates are approximate and depend on local retail activity. Trustees discussed the option of implementing the tax in 0.25% increments but several said an incremental approach would slow progress toward larger infrastructure needs and could reduce economies of scale in capital projects.

Trustees and staff discussed where incremental or full revenue would be allocated; Director Noonan and other staff recommended earmarking new revenue for capital improvements, including road reconstruction, sidewalks, fleet and heavy equipment used for infrastructure repairs. Several trustees cited a long list of unfunded capital projects in the village’s five‑year program and favored directing the tax revenue to infrastructure.

Legal and procedural concerns were raised by the village attorney: non‑home‑rule municipalities in Illinois face different statutory constraints than home‑rule municipalities, and the attorney recommended a legal review of statutory authority and public‑hearing requirements before proceeding. Staff said Algonquin and other nearby communities are taking similar actions and that municipalities across the region are coordinating through the Illinois Municipal League and local councils of governments.

Next steps and action: trustees signaled consensus to proceed. The board asked staff to place (1) an ordinance to continue the grocery sales tax (continuation of existing tax) and (2) an ordinance to adopt a 1% non‑home‑rule general sales tax on a future consent agenda (timing to meet the state filing deadline), while also conducting public outreach and working with the village attorney to confirm legal authority. No formal roll‑call vote was recorded at the Committee of the Whole meeting; trustees indicated support for moving both items to the board consent agenda for formal action.

Ending: Trustees directed staff to prepare ordinance language, outreach materials and required documentation for filing with the Illinois Department of Revenue and to return to the board with an implementation plan and legal findings.