Following the state legislature’s decision to eliminate Illinois' grocery tax, the Normal Town Council narrowly approved an ordinance on Tuesday to replace it with an equivalent local tax. The new tax will begin in 2026, the same time the town will stop receiving state funding to replace the lost tax revenue.
Prior to the moratorium enacted on the grocery tax in 2022-23, the town received about $2.3 million in annual revenue from the state grocery tax that imposes a 1% tax on “grocery items,” including food, drugs, and medical appliances.
After the moratorium, the state legislature “chose to make municipalities whole for the lost revenue,” directing other revenue to towns and cities. The original 1% grocery tax resumed after the pandemic.
But in its last session, the General Assembly decided to eliminate the grocery tax altogether. This means that on Jan. 1, 2026, Normal and all other municipalities in Illinois will lose this revenue stream without a source to replace it.
After a lengthy discussion, the council voted 4-3 in favor of the replacement grocery tax, with Mayor Chris Koos joining members Chemberly Harris, Kevin McCarthy, and Karyn Smith in voting in favor of the proposal. Members Andy Byars, Kathleen Lorenz, and Scott Preston voted "no."
Normal finance director Andrew Huhn told the council on Tuesday the town needs to make a “data-informed decision” about what to do facing a significant reduction in annual revenue, and that it would “require some significant action in our budget planning” to make up for it.
Huhn said the average yearly grocery expense is around $5,700, which under a 1% local grocery tax would amount to a $57 tax burden. He said the tax applies to “primarily food,” and some items at the grocery store such as paper products would not be subject to the tax.
This revenue is “important in terms of community investment and long-term planning,” said Huhn, adding the town needs room in its budget for things like infrastructure, housing development, debt reduction, pension contributions, and supporting “the town’s community service goals.”
Council members express their views
Following Huhn’s presentation, council members engaged in what they described as a “passionate” dialogue about the proposed tax.
Lorenz took issue with a PowerPoint slide in Huhn’s presentation that indicated the main purpose of the tax was to avoid the need for the town to reduce expenses, referring to it as “troubling.”
“We are all having to find ways to reduce expenses in our own households… what makes us so special to demand more revenue?” Lorenz asked.
She referenced opposition from the local League of Women Voters of McLean County, and said that one in four Americans is now counted as Asset Limited Income Constrained [ALICE], up from one in six a few years ago.
The graph showing this “is like a hockey stick” with the rate of growth, said Lorenz, adding the town should “focus on smart, efficient budgeting” instead of “taking” from hurting households.
Preston and Byars also opposed the tax.
Byars referred to the current grocery tax revenue as “1% of our budget,” saying it is not needed. He also questioned whether the same level of revenue will be retained after imposing the new tax, speculating that many consumers may opt to shop in neighboring Bloomington instead.
“It’s easy to think that some folks will choose to go to Bloomington to shop for their groceries to save a few bucks, especially when people will do anything right now to save a little bit of money,” Byars argued. “So I know that we’re counting on retaining 100% of this $2.3 million that we’re talking about, but I don’t think we can assume that.”
Preston highlighted the council is not just extending the status quo with this action, considering the state eliminated the grocery tax.
“Doing nothing would provide a little bit of relief to people at the grocery store,” he said, adding the council shouldn’t do “something just because it’s the way it’s always been.”
But council members Smith, Harris, and McCarthy all spoke in favor of the tax, arguing it will not place much of a burden on shoppers since the most vulnerable already are not taxed on SNAP benefits, and the rest can afford a small 1% tax on some grocery items.
Smith, who is an accountant, said her family spent far above the average on groceries last year, with around a $15,000 grocery bill. Around $150 of that was spent on the grocery tax.
She also argued there is very little wiggle room in the town’s budget, and that cuts would have to be made to departments or projects such as the new fire station due to contractual obligations in other areas.
Harris said it would take “eight years to the return” on savings from the grocery tax for most families, since the tax is so small. Harris also provided details about SNAP benefits.
McCarthy said he feels for families hit hard by inflation, but “the cost to operate this government is not immune” to those same pressures, especially when it comes to pensions and important concerns like roadwork.
If $2.3 million were removed from the budget, McCarthy said “all that starts to get put at risk, and real people’s jobs are put at risk” who work in local government.
In other matters
Also Monday, the council approved an amendment to the zoning code text that will “clarify, modernize, and simplify” the language, according to town planner Mercy Davison. It also could pave the way to higher density housing in Normal.
Several public commenters spoke at the end of the meeting about concerns surrounding traffic and housing around Illinois State University.
One resident described a series of dangerous traffic accidents in her neighborhood, and others complained about a higher percentage of rental properties, especially short-term rentals, on their blocks.
