Pritzker proposes eliminating sales tax on groceries, mayors worry about revenue loss

CHICAGO (WLS) -- Governor JB Pritzker's plan to permanently eliminate the sales tax on groceries drew praise for some lawmakers during his State of the State address. But the unintended consequences for local governments could be very costly.

The prices of groceries is still a concern for many shoppers; dollars just don't go as far as they used to. Because of that, Gov. Pritzker's idea to permanently do away with the 1% sales tax on groceries is appealing to some.

"The prices are so high in the stores. People are really struggling to buy groceries and stuff," said Porifiro Munoz, who lives on a fixed income.

In the city of Northlake, where there are four grocery stores, the mayor is genuinely worried about the impact on his community if lawmakers approve the governor's plan, because it's all money that goes back to communities.

"Well, it's a noble idea. I mean, that's great. Nobody wants to pay taxes, especially on groceries. But I think there's a whole string of unintended consequences going all the way down to the local level," said Mayor Jeffrey Sherwin.

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The mayor estimates Northlake would take a $250,000 hit. Mayors across the state are now scramblingto assess the impact on them.

Wheaton's mayor estimates if the grocery tax is eliminated, they would lose more than $2 million a year. Covering that loss would require, for example, a 12% city property tax hike. The other alternative would be cutting services, all to save consumers $1 for every $100 spent on groceries.

During the pandemic, when the Governor temporarily suspended the tax on groceries the state reimbursed municipalities. Under this new proposal that would not be the case.

"And that's what I don't think the state understands. While they can take credit for eliminating this tax, they're just going to push the burden down as an unfunded mandate to the same taxpayer is going to have to pay it somewhere else," said Brad Cole, CEO of the Illinois Municipal League.

This is setting up a full court press to make sure lawmakers know the fruit of a decision to get rid of the grocery tax.

"It's easy to be generous when somebody else is picking up the tab," Mayor Sherwin said.

Mayors across the state are concerned about how this issue will play out in an election year.