Add Bloomington to the list of the Illinois municipalities enacting a local grocery tax to replace the state tax that’s set to expire at the start of next year.
A divided city council voted in favor of the city administration’s recommendation to implement a 1% municipal grocery service tax during Monday’s regular meeting at the McLean County Government Center.
“I get nobody likes taxes and any tax, you could argue, is too much,” said City Manager Jeff Jurgens, noting the projected $3 million in revenue from the grocery tax is critical to offsetting the city’s operating deficit originally estimated at around $7.25 million — although revised estimates have lowered that figure to $1.5 million.
“If we keep the grocery tax in place, we project that we will not only not have a deficit, but we could potentially be in a position to move forward on some capital projects that we've been talking about for a number of years. So we would argue, as staff, the stakes are very high when it comes to this tax.”
Conversation over the grocery tax took up about half of the nearly two-hour meeting, with the ultimate vote split at 6-3 for approval. Council members Mollie Ward, Sheila Montney and John Danenberger dissented.
“I feel that we have a spending problem that is more significant than our revenue problem at this point,” said Montney. “If the estimate is $3 million in revenue that would be generated for the city through this tax, that means $3 million of revenue that would be taken out of the usable income of the people who are buying those products.”
Calling the 1% grocery tax regressive, Gov. JB Pritzker pushed to have it abolished during last year’s budget process, effective Jan. 1. Revenue collected by the state had been returned to local governments.
Local communities were given the opportunity to approve their own 1% percent sales tax on groceries. Jurgens said close to 600 municipalities have done so, including the Town of Normal. Governing bodies face an Oct. 1 deadline to file a local grocery tax ordinance with the state in order for it to take effect without interruption.
“I do think we have to take our medicine now and move forward,” said council member Micheal Mosley. “I'm not saying that this has to be permanent, that we shouldn’t continue to revisit this. But to take it away could have substantial impacts to us, and I think we stick with what we know versus what we may speculate.”
Former Mayor Mboka Mwilambwe previously said he felt there was little appetite among the city council for such a 1% tax, but that position apparently shifted among some members.
Ward’s initial motion at the outset of the discussion called for the council to reject the tax, a step that created some confusion when brought to a vote that ultimately failed, 4-5.
Council member Mike Straza’s move to amend the proposed ordinance to require all of the tax revenue be directed to infrastructure projects died without receiving a second, and Ward’s call to reduce the tax amount to 0.5% failed on a 2-7 vote.
Gaming licenses
Also Monday, the council approved raising the cap on video gaming licenses from 60 to 75, with Ward and Montney opposed. The move will enable 12 businesses currently on the city’s waiting list to apply for licenses.
“This is something that I started a conversation on in my position two years ago with council, and it's something that I think is important,” said council member Cody Hendricks, adding he thinks the city should consider going further and eliminating the cap entirely.
“I think this, this moves the needle forward in creating a more fair system within the City of Bloomington,” he said.
While supporters of the higher cap point to a potential for more tax revenue and more fairness in the process by giving all qualified businesses the same opportunity to compete, Montney cautioned a higher number of terminals is no guarantee the revenue they generate will increase.
“There is unambiguous research that supports that video gaming has a disparate income impact on lower-income people,” she said. “I do think there are a lot of things in this ordinance that need to be looked at in the future.”
Downtown tax break
The council also voted unanimously to approve a temporary sales tax rebate program to support downtown businesses impacted by ongoing streetscape construction.
“I think it shows good faith to those businesses that we want to keep those local businesses here, and that we recognize the impacts that it's having,” said Hendricks.
Eligible businesses can receive a 50% rebate of the city’s share of sales tax during construction periods of up to 12 months.
“We believe that, while it's not peanuts, the out-of-pocket [cost] to the city would be nominal, but the goodwill that this could generate to downtown businesses could be great,” said Deputy City Manager Billy Tyus.
Other business
Actions approved as part of a 14-item consent agenda include:
- Spending $975,000 for a water main condition assessment;
- A $440,000 contract with PIPCO Companies for HVAC replacement at Fire Station No. 3;
- An intergovernmental agreement with District 87 to spend no more than $250,000 on development of an inclusive playground at Stevenson Elementary School; and
- A $194,000 project to replace a fence at the Water Treatment Plant.
In one item pulled from the consent agenda, the council voted 9-1 in favor of rearranging the order of future regular city council meetings to move the mayor’s discussion after council members’ discussions. Abby Scott voted against the move.
