Repeal of state grocery tax could cost city of Springfield millions
Officials from the Office of Budget and Management estimate the city of Springfield would lose about $3.8 million in revenue for the year if Gov. JB Pritzker's call to repeal the Illinois grocery sales tax is successful.
Mayor Misty Buscher said she wished some sort of "sunset clause" would have been implemented. As it stands now, the 1% tax could permanently be removed by July 1, if approved by the general assembly.
Pritzker called it "one more regressive tax we just don't need" at the State of the State address in Springfield Feb. 21.
During the COVID pandemic, Pritzker temporarily suspended the grocery tax, but at that time, the state reimbursed municipalities.
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The current plan would do away with the tax all together.
Buscher, who is on the legislative committee for the Illinois Municipal League, said fellow Illinois Municipal League members felt "blindsided" by the move.
The Illinois Municipal League is "strongly opposed" to the proposal and has created a dedicated webpage with additional information, including data about the estimated financial impact of the proposed elimination on municipalities.
Responding to IML's criticism, Pritzker has repeatedly defended his proposal and points to new revenue sources that he has signed into law for local governments from adult-use cannabis sales and video gaming operations. Local governments also would retain the ability to institute their own local tax, he has said.
"Illinois is a state where we care deeply about working families, about those who are low income families and frankly, those who don’t have a job and may just have a little bit of money and go to the grocery store," Pritzker said at an unrelated press conference earlier this month. "And yeah, it’s only a dollar for every 100 that you spend. But that means a lot to people at the lowest end of the spectrum in terms of income."
Buscher and budget director Ramona Metzger have talked about "several different options, ideas and ways" to replace the revenue stream.
The money from the state tax goes into the city's corporate fund, which does everything from paying salaries to funding equipment to paying daily bills, Buscher said.
A sunset warning, Buscher added, "would have been more palatable for all the municipalities to get ready for. With that being said, we have been talking about the different ways we can look at either revenue generation or rerouting revenue as well."
Pritzker announcing a potential removal of the grocery tax comes after Springfield city council approved the city's budget on Feb. 20, with the new fiscal year starting March 1.
"We're already talking about what options we could have and then I'll have those conversations with the aldermen and alderwomen as well," she said.
Ward 10 Ald. Ralph Hanauer said he was "very concerned" about the situation.
"The state's once again poking holes in the municipalities' budgets," Hanauer said. "That's a lot of money for us. It's a shame, and now we're going to have to figure out how to fill that hole."
Patrick M. Keck of The State Journal-Register contributed to this report. Contact Steven Spearie: 217-622-1788; [email protected]; X, twitter.com/@StevenSpearie.
This article originally appeared on State Journal-Register: Repeal of state grocery tax could cost Springfield millions of dollars