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Aurora finance staff urges council to adopt 1% municipal grocery tax ahead of state deadline
Summary
Finance staff told aldermen an ordinance to reinstate the 1% grocery retailers’ occupation tax must be filed with the state by Oct. 1 to avoid an estimated $4.5 million revenue loss; aldermen asked about timing, SNAP exemptions and whether the city must take the full 1% or can adopt a lower rate.
Finance staff presented an ordinance on July 15 that would ask the City Council to adopt a 1% municipal grocery retailers’ occupation tax after the state revoked its 1% collections in 2024 and gave municipalities the option to continue the revenue locally. Stacy Peterson, the city’s director of financial operations, said the governor signed legislation in August 2024 that allows municipalities to enact the 1% tax and that an ordinance must be filed with the state by Oct. 1 to keep collection and remittance handled by the Illinois Department of Revenue.
Peterson said the city could lose roughly $4.5 million in annual revenue if it does not adopt the tax. She said federal law prohibits collecting grocery sales taxes on items purchased with SNAP benefits and that the Illinois Municipal League’s tracking sheet listed 282 municipalities that had enacted the tax by late June.
Council discussion: aldermen questioned whether Aurora could delay adoption, whether the tax must be exactly 1% or could be set lower, and how quickly the city would see the revenue. Chris Minnick, the city’s chief financial officer, said he would confirm the legislative window and that staff intends to present a balanced budget regardless, but that omitting the grocery tax would require compensating with service cuts or other revenue increases.
Legal and administrative points: multiple council members asked whether the state will continue to collect and remit the tax on behalf of municipalities; Shannon Cameron, chief of staff, said an amendment removed any state service fee so the state will remit the full amount. Minnick and staff said they would research whether the statute requires a 1% fixed rate or permits a lower rate; the council’s recollection at the meeting was that the enabling statute had been presented as an all‑or‑nothing 1% option but that staff would confirm.
Next steps: the ordinance (listed as 25‑0519) was placed on the committee’s unfinished business calendar for additional review and legal confirmation of filing windows and rate flexibility. Peterson said staff will include a FAQ and background materials for aldermen.
Ending: Council members requested a clearer explanation of the city’s fund balance and the exact budget impact if the municipality chooses to defer or decline the tax for one year; staff said it will return with confirmed legal guidance and budget projections.
