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Lake Forest moves to reinstate 1% grocery tax effective Jan. 1, 2026
Summary
On a 7-0 vote with one abstention, the council approved an ordinance to adopt a 1% municipal grocery tax beginning Jan. 1, 2026, to replace a state-level tax the legislature repealed. Staff said the city typically receives about $525,000 annually from the tax.
Lake Forest — The City Council approved an ordinance Tuesday to impose a 1% municipal grocery tax effective Jan. 1, 2026, after the state repealed the corresponding state-collected tax.
City staff explained that when the state repealed the long-standing 1% grocery tax as part of the FY25 state budget, it left municipalities with the option to adopt an equivalent local tax to preserve the revenue stream. Staff told the council the city typically receives about $525,000 per year in grocery-tax revenue and that, by law, action must occur before July 1 for the tax to take effect Jan. 1.
“Absent any action by the council, the 1% tax would expire on January 1 of 2026,” City Manager Jason Wisha said. He and staff described the revenue as part of the general fund used for operating expenses. During public comment, resident Romy Lopez asked for a consolidated list of fees and small taxes the city has added or adjusted in recent years to show the cumulative burden on residents; Lopez urged the council to consider thresholds for scaling back projects if fees and charges grow too large.
Council members debated the measure and its budgetary role; one alderman abstained and called the action a “political shell game.” The ordinance passed on a roll-call vote with seven yeas, one abstention and no nays.
Council materials show staff intends the grocery-tax revenue to fund general operations. The ordinance approved Tuesday was presented as a final-reading measure; staff said municipalities can impose the local tax to capture revenue that previously flowed through the state as a pass-through to local governments.
The council did not adopt specific offsets or rebates; staff emphasized the funds are typically used for one-time operating or capital needs rather than recurring expenditures. Council members said they would continue to address budget priorities and community questions about fees and taxes in future budget discussions.
