City Considers Alternatives to Grocery Tax
As the deadline approaches for municipalities to implement their own grocery taxes, members of Evanston’s Finance & Budget Committee are weighing whether a property tax hike would be a more transparent alternative to replacing the expiring state grocery tax. The state has eliminated the grocery sales tax effective January 1, 2026, prompting cities to consider local versions to offset revenue losses.
Hitesh Desai, Evanston’s Chief Financial Officer, indicated that the city currently receives around $2.5 million annually from the state grocery tax. “Grocery sales are a stable revenue source that does not fluctuate much with the local economy,” Desai noted in a memo to the committee.
More than 160 municipalities have already adopted local grocery taxes, following the state’s decision. Neighboring Skokie is expected to pass its ordinance by the end of the summer. Meanwhile, Chicago and Wilmette remain undecided. Municipalities must adopt a local tax by October 1 to avoid a gap in revenue collection starting in 2026.
Public Voices and Economic Considerations
During public comment, Dylan Sharkey, a Northwestern graduate and assistant editor at the Illinois Policy Institute, argued that the city could view the $2.5 million not as a loss but as potential savings for residents. “That’s about $33 per person or $130 for a family of four,” he said, adding that eliminating the tax could make Evanston more attractive to shoppers from outside the city.
Sharkey illustrated his point with a recent shopping trip to Aldi, where he spent $30. “That’s a decent amount of food. Imagine being able to provide that to every family of four in Evanston each year,” he said. He also suggested that increased out-of-town shopping could boost other local sales taxes.
However, Councilmember Tom Suffredin (6th Ward) pointed out that nearly half of grocery sales in Evanston come from nonresidents. According to data compiled by Paul Zalmezak, the city’s economic development manager, nonresidents account for 35% to 83% of sales at different stores. “Raising property taxes would fall entirely on Evanston residents,” Suffredin cautioned.
Exploring Budget Cuts and Expenditures
In the committee discussion, Councilmember Clare Kelly (1st Ward) suggested that rather than imposing new taxes, the city should scrutinize its discretionary spending. She referenced recent federal budget changes that could affect food assistance programs for local students and proposed reducing high consulting fees to help close the revenue gap.
“Given our existing tax burden, we need to look harder at cutting back on nonessential spending,” Kelly emphasized.
Parielle Davis, a newly elected councilmember from the 7th Ward, criticized the grocery tax as a regressive measure. “It hits you after you’ve already made your purchase. It’s hidden,” she said. Davis expressed a willingness to consider a property tax hike instead, and advocated for prioritizing essential services over one-time projects. “When it comes to budgeting, food should come before a new community center,” she said, referencing the city’s recent $2.6 million purchase of the former Little Beans Café for repurposing.
Balancing Budget Priorities
Matt Rodgers, another first-term councilmember from the 8th Ward, acknowledged the complexity of the issue. “While the $2.5 million shortfall is significant, it’s a manageable portion of the overall budget,” he remarked. Rodgers emphasized the importance of prioritizing necessities over “nice-to-have” items and called for a detailed review of current expenditures.
“With federal tax cuts benefitting the wealthy and local tax increases impacting those near the benefit threshold, we must find ways to help our residents,” he added.
Long-Term Financial Planning
The committee’s decision on the grocery tax could significantly influence the 2026 city budget. Former committee chair David Livingston warned that the city is nearing the end of its financial cushion. “We’ll probably make it through this budget cycle, but by next year, our excess reserves might be depleted,” he said.
Livingston also flagged potential increases in pension contributions due to actuarial adjustments. “We’re already contributing over $30 million to public safety pensions. These numbers could rise, and we need accurate projections as soon as possible,” he urged.
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