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Highland council hears estimates of nearly $500,000 hit from Illinois grocery tax repeal
Summary
City Manager Chris Conrad told the Highland City Council that recent state guidance suggests the city could lose about $130,000 in diverted personal property funds and nearly $500,000 in revenue over 18 months if the state eliminates the grocery tax; councilmembers debated timing for local action and whether other state funds would replace losses.
City Manager Chris Conrad told the Highland City Council on Oct. 7 that guidance from the Illinois Department of Revenue and recent state changes mean Highland faces a projected $130,000 reduction tied to diverted personal property funds and "nearly $500,000 in tax revenue over 18 months" if the state’s grocery tax is eliminated. Conrad said municipalities have until October 2025 to file with the Illinois Department of Revenue to avoid an immediate change or break in local tax status.
Conrad said some communities have already acted and others are waiting until after next year’s elections. He warned that the Illinois Local Distributive Fund would not make all cities whole because the ILDF distributes equally to municipalities rather than tailoring payments to shopping-hub communities. "The grocery tax generates $5 million across the state; however, it does not affect everyone the same," Conrad said, noting the state fund cannot replace lost revenue dollar for dollar.
Council members weighed the trade-offs. Councilwoman Bellm and Councilwoman Sloan said they are ready to bring the matter forward for a council vote. Councilman Frey said residents who have been informed understand they may lose services that exceed any direct savings from eliminating the tax. Councilman Napper said he had received about 30 emails opposing action to retain the tax locally; Mayor Kevin Hemann said he questioned the origin of some form emails and noted a link circulating through media outlets.
No formal motion was made at the Oct. 7 meeting; council members discussed timing and outreach. City staff advised continued analysis of local revenue impacts and noted legislative and election-year uncertainty at the state level. The council did not adopt an ordinance at this meeting; members indicated they could return this issue for a formal vote at a future meeting.
What’s next: staff will continue to analyze the budgetary effects and the council will decide whether to place a local ordinance for consideration before the October 2025 departmental filing deadline with the Illinois Department of Revenue.
