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* In the days leading up to Gov. JB Pritzker’s budget address, the Illinois Municipal League pushed a plan that would cost the state’s budget $800-875 million per year…
The [Local Government Distributive Fund] share is 6.47% of individual income tax collections and 6.845% of corporate income tax collections. Before 2011, 10% of state income tax dollars were dedicated to LGDF and distributed to cities and counties. IML is supporting a bill to reinstate the 10% number.
Tons of mayors, including Chicago’s, hotly opposed the state income tax increase back in 2011.
* In seeming reply, the governor’s budget office noted in its analysis of the proposed spending plan how much the state is spending on local governments since Pritzker took office…
The operations of local governments are a critical part of the state financial infrastructure. When possible, the State has provided additional funding mechanisms to help local governments, including one-time and permanent revenue supports to minimize the need for local property tax increases. Examples of on-going support, totaling over $1.3 billion annually, enacted since Governor Pritzker took office include:
• An additional $200 million a year in sales taxes from the passage of internet sales tax language following the Wayfair decision, including the Leveling the Playing Field for Illinois Retail Act, to help ensure compliance with state tax laws on internet sales.
• Over $680 million annually in additional motor fuel taxes directed to local governments and transit districts to support needed transportation projects through the passage of Rebuild Illinois.
• Granting $1.5 billion in state transportation bond funds directly to local governments for road and highway project expenditures, saving local governments $110 million annually in debt service costs from not issuing local bonds.
• Authorization of adult-use cannabis, generating an estimated $100 million in additional revenues for local governments.
• Increased allocations through the Local Government Distributive Fund process totaling $46 million annually from business loophole closures included in PA 102-0016.
• Increased tax rates and positions for video gaming operations expected to generate an additional $80 million a year for local governments Additional local revenues from the opening of new casinos authorized under the Rebuild Illinois plan, including the first revenues from the new Chicago casino licensed in 2023.
• Increased percentage of individual income taxes that state government shares with municipalities and counties from 6.16 to 6.47 percent of total individual income tax collections. This increase is worth $88 million annually.Illinois distributed to smaller local governments $250 million from its Coronavirus Relief Fund allocation and established the infrastructure necessary to distribute the $740 million Local Fiscal Recovery Fund payment received pursuant to ARPA. These key sources of funding helped small local governments maintain services during uncertain fiscal times.
* So now, instead of focusing on expanding the LGDF, the Municipal League is playing defense against the governor’s proposal to eliminate a state-collected but locally distributed and very regressive tax…
A major element of the governor’s proposal of eliminating the 1% grocery tax will be entirely on the backs of local governments.
“That’s for the rest of time, hundreds of millions of dollars annually impact against local governments,” Cole told The Center Square. “That grocery tax solely goes to municipalities. There is no state money in there at all. So when the governor offered to reduce that, he eliminated local funding. So, take away three- or four-hundred million dollars, [cities] are going to have to come up with it somehow.”
* Some local government officials are unclear on the concept…
Illinois Governor J.B. Pritzker’s plan to eliminate the grocery sales tax will result in an $800,000 loss in revenue to the village of Montgomery.
At Monday’s Montgomery Village Board meeting, trustee Steve Jungermann voiced opposition to the proposal: “State officials, you need to do your jobs and pass an honest, balanced budget.”
After the meeting, Jungermann was interviewed by WSPY News: “…The state, they need to pass an honest, balanced budget and not depend and fall back onto the municipalities. You’re essentially stealing money from the municipalities. We depend on that money.”
To be clear, Pritzker isn’t proposing that the state spend the $350 million or so per year from the grocery tax. He just wants to get rid of the tax altogether and allow locals to impose their own replacement if they want.
* At an unrelated press conference today, a reporter noted “there’s a lot of pushback on this bill.”
“They say ‘If you take this away and you save taxpayers $1 for every 100 they spend on groceries … they’re gonna have to raise taxes elsewhere.” So, the reporter asked Pritzker, “Are you willing to reconsider this? Because it’s going to hurt communities across the state of Illinois by taking away that source of revenue.”
Pritzker’s response…
No, I’m not willing to reconsider it. Here’s what I’m saying about the grocery tax. It’s the most regressive tax you could have, really We think about all the regressive taxes that exist in the state of Illinois. This one goes after people who are just trying to buy food. And when you say it’s, ‘Oh, it’s a dollar out of every 100.’ Well, that could be hundreds of dollars for a family across a year. So you know that that matters to many people.
And the grocery tax, by the way, we’re in the vast, vast minority of states that still have a grocery tax. Almost every other state has gotten rid of their grocery tax. We still have one, that’s not right.
Now, municipalities I absolutely believe that the state should be supporting municipalities. And indeed, as long as I’ve been governor, we’ve added $1.3 billion to the coffers of local governments across the state. That didn’t happen under my predecessor. It’s because I believe in investing in local government. It’s closest to the people. They deserve to have the kind of funding that they need to support local projects and local government, but the grocery tax doesn’t seem like the best way to do it.
But I want to be clear, I have said that the bill that would be put forward should include the ability for local governments, if they want to impose a grocery tax on their local residents, they should be able to go do that. I don’t think it’s the right thing to do. I wouldn’t do it locally. Having said that, I understand the need for the dollars and if they feel like they need them, they should think about imposing that tax on their own.
I have increased LGDF, that’s the Local Government Distributive Fund, which is one of the ways in which we send money from the state to local governments. I have increased the dollars that local governments get for infrastructure. By passing rebuild Illinois sending dollars directly without any conditions other than as for us for infrastructure to local governments. So I’m you know, I’m a believer in continuing to fund them. But you know, we have a tight budgetary situation this year, so we won’t be able to do as much more as we have done in previous years, but we’ll continue to look at ways to support them. Grocery tax, it seems to me, it’s time for us to end this regressive tax.
I’m thinking the mayors absolutely do not want to have the power to impose the tax on their own, up to and including Chicago’s progressive mayor.
Thoughts?
…Adding… Good point in comments…
I do wish the governor had chosen his words more carefully when talking about the savings that families will see. I doubt many families will even see $100 of savings in a year let alone “hundreds of dollars” a year as he said. I know groceries have gotten more expensive but a family would have to spend $10,000 on groceries a year to see even a $100 savings.
posted by Rich Miller
Wednesday, Feb 28, 24 @ 11:50 am
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You mean the proposal that got a standing ovation from Republicans in the House?
Comment by walker Wednesday, Feb 28, 24 @ 11:55 am
I hate to tell them but the public isn’t going to be on their side as far as keeping the grocery tax.
Comment by Demoralized Wednesday, Feb 28, 24 @ 11:59 am
Two words…Local. Control.
Comment by JS Mill Wednesday, Feb 28, 24 @ 12:00 pm
Don’t have an issue with conceptual narrative by Governor. It’s not debatable that it is extremely regressive. But there simply isn’t legal authority for many towns to simply invent a non-home rule sales tax without a referendum to replace those dollars. Referendums and then the implementation of said sales tax usually takes one year. If the State provided the legal authority to create sales tax without referendums to all municipalities and gave them a year to make their decision, I think this would be a lot smoother of an issue. But many towns legitimately do not have a lever to pull even if they want to - I hope the Governor appreciates that.
Comment by DuPage Dad Wednesday, Feb 28, 24 @ 12:04 pm
I agree with the Governor; the tax should be eliminated.
Comment by Just a Citizen Wednesday, Feb 28, 24 @ 12:04 pm
JS. Local control but not local accountability.
Comment by very old soil Wednesday, Feb 28, 24 @ 12:08 pm
===there simply isn’t legal authority for many towns===
He addressed that in his comments.
Comment by Rich Miller Wednesday, Feb 28, 24 @ 12:09 pm
Perhaps this could be the first step to greater Home Rule authority?
Comment by Anyone Remember Wednesday, Feb 28, 24 @ 12:12 pm
Seems like towns want money but don’t want to deal with the political blowback of imposing their own local taxes. I say screw ‘em, in this particular situation.
I in fact generally believe more things that Illinois does at the municipal and county level should actually be done at the state level to spread the burden out better. Smaller dying post industrial towns don’t have the tax bases to support their needs the way affluent suburbs do. But at the same time, using one of the most regressive sales taxes by taxing a mandatory commodity in the case of food is not the way to do it.
The Montgomery guy should not be talking about honesty. Eliminating the grocery tax has nothing to do with the state budget, since the state wasn’t keeping that money in the first place.
Comment by Homebody Wednesday, Feb 28, 24 @ 12:13 pm
I always think it’s a lost opportunity to not talk about the total dollar amounts of the LGDF.
When the LGDF was 10%, the state income tax was far lower - 2.5%
Lets do the math with real numbers.
When LGDF was established with the income tax, the income tax was 2.5%.
Today, with an income tax of 4.95% the real equivalent LGDF distribution would be 5.15%. An almost doubling of the income tax rate over that period of time, would mean an equal real dollar amount with half the 10% LGDF rate.
The cities are instead getting 6.47%.
The state is currently overpaying locals by 1.32%, going by the spirit of the LGDF when it was passed
into law.
So sure local mayors, lets keep talking about the LGDF. I look forward to seeing just a single one of them produce an actual spreadsheet with nominal values(not percentages)to support their position.
Comment by TheInvisibleMan Wednesday, Feb 28, 24 @ 12:15 pm
The IML should wave the white flag. JB and his team have already one this one.
Comment by Overbay Wednesday, Feb 28, 24 @ 12:24 pm
I love the politics of it.
Pritzker: we don’t want to be responsible for this anymore, it should be your responsibility
Mayors: How dare you?
Comment by Nick Wednesday, Feb 28, 24 @ 12:35 pm
Can the referendum requirements for non-home rule communities be waived on a case-by-case basis as the governor seems to be proposing? Would it stand up to challenges?
Comment by Lefty Lefty Wednesday, Feb 28, 24 @ 12:38 pm
I have no problem make it local. How about raise sin taxes ? Increase alcohol tax and maybe Tony Preckwinkle was ahead of her time tax sugary drinks although that is probably equivalent to not plowing snow
Comment by DuPage Saint Wednesday, Feb 28, 24 @ 12:40 pm
Pretty clear the mayors want the income but lack the guts to do that taxation with their own names in it, even if it was an exact duplicate amount or even a little less.
It’s another reason we should have gone with that fair tax proposal when we had the chance: these mayors would have been able to take credit for lower property tax and get more infrastructure done.
Comment by Give Us Barabbas Wednesday, Feb 28, 24 @ 12:40 pm
Creating 1000 political fights for a 1% grocery tax that isn’t as regressive as billed(Snap purchases don’t pay the tax) for a proposal that the Republicans love makes no sense to me.
Comment by Ducky LaMoore Wednesday, Feb 28, 24 @ 12:54 pm
It’s interesting that the Gov felt strongly enough about replacing the 1% revenue stream when he eliminated the grocery tax as a campaign gimmick during the last election cycle, that he used Federal Covid dollars to replace it for local governments. Now replacing it becomes the locals’ issue to solve?
Having it both ways, as usual.
Comment by Big Tent Wednesday, Feb 28, 24 @ 1:02 pm
Grocery tax as constituted is a Mayoral protection racket. Time to grow a pair, mayors.
Comment by Joe Bidenopolous Wednesday, Feb 28, 24 @ 1:06 pm
If it can be managed by local governments i.e. the ability to raise a grocery tax then it helps. It seems like undue hardship. But part of the inflation problem it doesn’t address is corporate greed and voter willingness for the consequences. What did voters think would happen upon giving big chain grocery stores an annual 40% federal tax cut? Where’s the inflation relief from those whose incomes nearly double every year? Would be ironic if services are cut in the “trickle down” parts of the state because cities won’t raise the missing grocery tax revenue.
Comment by Grandson of Man Wednesday, Feb 28, 24 @ 1:08 pm
===used Federal Covid dollars to replace it===
Correct, and that money is gone.
Comment by Rich Miller Wednesday, Feb 28, 24 @ 1:12 pm
sales tax on food and medicine was an issue for Daley way back in the day, as in Legislature. it’s regressive. but if municipality wants to municipality, they know their electorate. so be it.
Comment by Amalia Wednesday, Feb 28, 24 @ 1:17 pm
Sorry mayors. If you want the money, it’s time to own the tax.
Comment by Sad Wednesday, Feb 28, 24 @ 1:20 pm
Many times local Mayors don’t understand the full realities of state budgets and how there are many different ways the money filters down to them.
They do however know how bad a sales tax can impact them. Toni Preckwinkle pummeled Todd Stroger to roll back the 1% Cook County sales tax increase and won her race. She then removed the tax at a savings to taxpayers of almost half a billion dollars. In 2015 Preckwinkle put that 1% sales tax back in place. By then she was strong enough that she wouldn’t be taken out. Small-town Mayors do not have the strength nor the political will to want to take that vote at their local meeting.
Comment by Frida's boss Wednesday, Feb 28, 24 @ 1:33 pm
The issue is there is not a mechanism to allow local units of government a tax on groceries. IF that is fixed and then not tied to a referendum I think it makes more sense. But this proposal will hurt the very people the Governor is trying to help by cutting funds to local government.
I am a supporter of the Governor, believe is has been transformative, but we must govern in reality and the reality is local government is facing increased costs.
There has to be a reasonable way for them to make up the hole.
Comment by Route 50 Corridor Wednesday, Feb 28, 24 @ 1:35 pm
I do wish the governor had chosen his words more carefully when talking about the savings that families will see. I doubt many families will even see $100 of savings in a year let alone “hundreds of dollars” a year as he said. I know groceries have gotten more expensive but a family would have to spend $10,000 on groceries a year to see even a $100 savings.
I’m on the governor’s side in this though. It is a regressive tax that most states have moved away from. If municipalities want to keep that grocery tax coming in then they need to own the tax. They are only objecting because they don’t want to be the person to increase taxes but still want that money coming in.
Comment by Aaron B Wednesday, Feb 28, 24 @ 1:56 pm
This was over the moment JB said it in his speech last week. The IML and local mayors should move on but they are out there talking nuance and just end up amplifying JB’s clear eyed position. Team JB does it again. This is a BIG winner.
Comment by Droids Wednesday, Feb 28, 24 @ 2:03 pm
==And when you say it’s, ‘Oh, it’s a dollar out of every 100.’ Well, that could be hundreds of dollars for a family across a year.==
You’d need to annually spend at least 20,000 THOUSAND dollars each year to reap “hundreds” in savings. I call pants on fire.
Comment by Nope. Wednesday, Feb 28, 24 @ 2:06 pm
One thing that I haven’t seen mentioned is the RTA’s tax on groceries. RTA imposed it themselves, so I think the Governor will let that stay in place (not that RTA can afford to get rid of it). But if the Governor is successful in changing the law, every person in Cook and the collar Counties will still pay the RTA sales tax on groceries. I imagine voters won’t understand that nuance and be grumpy.
Comment by Numbers Wednesday, Feb 28, 24 @ 2:30 pm
===This was over the moment JB said it in his speech last week. The IML and local mayors should move on but they are out there talking nuance and just end up amplifying JB’s clear eyed position. Team JB does it again. This is a BIG winner.===
How can it be a big win if the same people he is trying to help end up seeing services cut. That isn’t a win at all. And as to nuance, our actions have consequences and many times unintended ones, this will be one. There is going to be cuts in communities where councils don’t pass the tax, point blank.
Comment by Route 50 Corridor Wednesday, Feb 28, 24 @ 2:35 pm
The RTA and MED taxes will remain. And am I correct in thinking the RTA/MED tax grocery food?
Comment by Cool Papa Bell Wednesday, Feb 28, 24 @ 2:36 pm
You can spend $10,000 a year on groceries if you have kids and cook most days.
Comment by Three Dimensional Checker Wednesday, Feb 28, 24 @ 2:36 pm
===if you have kids and cook most days===
Yeah, but the governor said “hundreds.” That’s more than one hundred.
Comment by Rich Miller Wednesday, Feb 28, 24 @ 2:43 pm
===Yeah, but the governor said “hundreds.” That’s more than one hundred.===
This seems like the least harmful political puffery going on in Illinois these days, but maybe that is just me.
Comment by Three Dimensional Checker Wednesday, Feb 28, 24 @ 2:58 pm
–Illinois Governor J.B. Pritzker’s plan to eliminate the grocery sales tax will result in an $800,000 loss in revenue to the village of Montgomery.–
Wow, I would not have thought that 80 million dollars a year were spent on groceries (remember that figure excludes junk and prepared food), in just this one community. Shows how isolated my existence is.
Comment by Stix Hix Wednesday, Feb 28, 24 @ 3:03 pm
Route 50 Corridor ==….cuts in communities…===
You are missing the point. There were only be “cuts” if the local elected officials who get all of that revenue today, determine that it is necessary. What the governor has brilliantly laid out is that the state isn’t going to be collecting regressive taxes anymore for local governments. Why should the state impose a regressive tax that funds 100% to local governments? That, on its face, is ridiculous. Local governments that constantly raise property taxes and point fingers at the state government.
Comment by No man Wednesday, Feb 28, 24 @ 3:07 pm
==I’m thinking the mayors absolutely do not want to have the power to impose the tax on their own, up to and including Chicago’s progressive mayor.==
Yup. It’s great to be in charge until you are.
Comment by Flapdoodle Wednesday, Feb 28, 24 @ 3:26 pm
No Man
I don’t know if you know, but property tax rates are capped for use in the general fund. Once you are at the highest rate that is, that.
On its face cities across Illinois are currently budgeting and they have to be passed, by statute, in April. This proposal leaves a tremendous amount of certainty for that process.
I think you miss the point that most small to medium size municipalities do a pretty good job of staying within their budgets and being as frugal as possible.
Comment by Route 50 Corridor Wednesday, Feb 28, 24 @ 3:42 pm
Much of the problem is the clumsy rollout. When this was first announced, there was no mention of changing the law to allow locals to impose a tax. It wasn’t until later that this idea of local taxes emerged. Even now, no one’s explained what that process will look like. There are scads of locally imposed taxes that the state collects and distributes. In fact, the state forces locals to go through the state collection/distribution system for their local taxes, whether they want to or not (and charges a 10% rake). If that’s the intent here, then its probably not a huge deal. If, however, the expectation is that each local will have to set up a collection system for this one particular tax, then the policy becomes much less…smart.
Comment by Duck Duck Goose Wednesday, Feb 28, 24 @ 3:52 pm
==Well, that could be hundreds of dollars for a family across a year==
$30,000 a year spent on staple groceries?
Comment by City Zen Wednesday, Feb 28, 24 @ 4:10 pm
I don’t know that non-home rule entities can enact a sales tax on groceries independent of the state sales tax. Is the Governor planning on supporting a bill to authorize non-home rule entities to do so?
Comment by Just Another Anon Wednesday, Feb 28, 24 @ 4:45 pm
My memory may be faulty, but wasn’t there a capital program that passed and raised a special tax on junk food? If I remember that correctly that means the state can keep the grocery tax on that type, and/or lower it just for actual nutritional food. The retail industry hates such complicated tax structures because it is a pain to figure out, but oh well.
Someone please correct me if my memory is faulty.
Comment by Just Me 2 Wednesday, Feb 28, 24 @ 6:36 pm
Feeding a family of 4 with two teens, I would have hundreds of dollars. Probably two hundreds, but hundreds nonetheless.
Comment by Jibba Wednesday, Feb 28, 24 @ 7:14 pm
Reminder that the groceries this applies to is only food meant for non-immediate consumption. It doesn’t apply to the high rate items such as toilet paper, paper towels, laundry detergent, soda, candy, etc. Most individuals would save about $50 per year and if the local government imposes a replacement tax, there is no savings at all.
Comment by grocery goblin Thursday, Feb 29, 24 @ 4:43 pm