Will Mount Prospect hop on the grocery tax bandwagon?

Mount Prospect could become the latest community to adopt a local grocery tax, in reaction to the state’s decision to stop collecting the tax for municipalities in 2026.

The village board is expected to vote Wednesday to adopt a 1% grocery tax ordinance

Village officials said voting to preserve the revenue stream could prevent the loss of more than $925,000 to the village.

The new grocery tax revenue would be earmarked for pension payments, officials said.

“The idea was to use the grocery tax as a way to fund our pensions,” Mayor Paul Hoefert said. “Because we're trying to fully fund pensions by 2040.”

Municipalities have until Oct. 1 to adopt local ordinances to continue collecting the tax independently.

“I think it's a continuation of an existing tax,” Trustee John Matuszak said. “It's not a new tax, and I think it would defer and enacting it would diversify our income stream, which is something we need to do as a village.”

The village collected $923,437 in 2024, $886,522 in 2023 and $806,056 in 2022.

Neighboring municipalities have already passed similar 1% local grocery tax ordinances, including Des Plaines, Elk Grove Village, Hoffman Estates, Morton Grove, Palatine, Schaumburg, Wheeling, Carol Stream, Buffalo Grove and Lake Zurich.

Although the village has generated $33.9 million in surpluses from fiscal years 2022-2024, officials said $13.0 million has been earmarked to the Economic Emergency Fund and $20.8 million to general fund reserves.

Use of reserves has enabled the village to cover pension costs and other debts, eliminate vehicle sticker fees and fund capital projects, saving taxpayers dollars, officials said.