Gurnee hiking local sales tax to replace lost grocery tax revenue — and then some
The expiring 1% state grocery tax will not be reinstated with a local version in Gurnee, but village officials instead will increase their local sales tax to spread the cost to visitors.
In fact, because Gurnee's non-grocery retail base is so expansive, the decision is expected to generate more than double the revenue of the grocery tax and save the average local household $85 per year.
“This shifts the burden to visitors in our community,” Village Administrator Patrick Muetz told village trustees Monday, before a vote to impose an additional 0.5% home rule sales tax.
Communities across the state are facing a choice of whether or how to replace revenue that will be lost when the state tax on groceries ends Jan. 1. Illinois is allowing communities to enact a local grocery tax and many have chosen to go that route.
In Gurnee, the grocery tax generates $2 million to $2.5 million per year. The added sales tax, which will raise the village's sales tax rate on general merchandise to 8.5%, is expected to raise about $5.5 million.
The additional revenue will be used for water and sewer projects, including replacing the aging water main system, according to Austin Pollack, assistant to the administrator.
Raising that funding for infrastructure through water rates alone would increase the average household bill by about $180 a year, according to the village.
Trustee Kevin Woodside said a home rule sales tax increase rather than replacing the state grocery tax with the local equivalent is a good idea and will allow the village to give residents a break on food.
According to information cited by the village, the average household spends more on food than other items subject to sales tax and Gurnee residents visit grocery stores more than any other type of retailer.
Pollack noted that not having a grocery tax puts Gurnee at a competitive advantage compared to the majority of communities that have or expected to implement a local grocery tax.