By Jason Crane
The Aurora City Council voted 7 – 5 to continue a 1% tax on grocery items at the Tuesday, Aug. 26 City Council meeting.
The Illinois state grocery tax of 1% is set to be eliminated effective January 1, 2026, as per Public Act 103-0781, and provides municipalities the authority to enact a local sales tax on grocery items.
City officials voted in favor to implement the local grocery tax effective January 1, 2026 to avoid revenue loss and service cuts as a result of the State action.
Reasons for the approval of the tax include concerns about an approximate $30 million deficit in the City’s General Fund.
City government of Aurora documents show the 1% sales tax on groceries that has been in place since the 1990 sales tax reform. The 1990 reform eliminated state taxation on groceries but provided for a 1% grocery tax imposed and administered by the State but distributed to local governments. It also standardized tax collection.
Those who voted in favor of the Ordinance were: 1st Ward alderman Daniel Barreiro, 5th Ward alderman Carl Franco, 6th Ward alderman Michael Saville, 8th Ward alderwoman Patty Smith, 7th Ward alderman Javier Bañuelos, 9th Ward alderman Edward Bugg, and alderman-at-large Will White,.
Those who voted against the Ordinance were: 2nd Ward alderwoman Juany Garza, 3rd Ward alderman Ted Mesiacos, 4th Ward alderman Jonathan Núñez, 10th Ward alderwoman Shweta Baid, and alderman-at-large Keith Larson.
Chief of Staff, Shannon Cameron stated 513 municipalities throughout the State have approved ordinances to impose a local tax to replace the State tax.
The City would lose an estimated $4.5 million annually should it stop collecting the tax.
The proceeds of the tax will be distributed to the City by the State. The City records these revenues in the General Fund and they are utilized to provide services such as Police, Fire, Public Works, and other governmental services.
City officials emphasized this is not an imposition of a new tax. Passing the ordinance continues the current practice of collecting a 1% tax on the sale of grocery items that has been in place for 35 years.
The grocery tax is collected from everyone who purchases grocery items in the community, including non-residents. The Grocery Tax is applied to food that is not intended for immediate consumption, but is anticipated to be taken away from the premises where purchased, prepared, and consumed at a later time.
Food intended for immediate consumption and restaurant food is taxed at the regular sales tax rate (8.25%) plus the Food and Beverage Tax (1.75%) for a total rate of 10%. The tax rate for food sales for immediate consumption is not impacted by the Grocery Tax.
The City’s Home Rule Sales Tax of 1.25% does not apply to items subject to the grocery tax.
If the City does not implement a grocery tax, it will lose approximately $4.5 million a year, potentially leading to budget cuts and reduced services.
As of June 26, 2025, 282 municipalities throughout the State have passed an Ordinance to impose a local tax to replace the state tax. An additional reference is a Grocery Tax Frequently Asked Questions from the DuPage Mayors and Managers Conference.
To implement a grocery tax, the City needs to pass the ordinance and submit it to the state by October 1, 2025, to ensure it takes effect January 1,2026.
•Approval was given to an Ordinance authorizing a 100% principal forgiveness loan agreement for the Lead Service Line Replacement Project.
The City previously applied for a 100% principal forgiveness loan from the Illinois Environmental Protection Agency to fund the upcoming “Lead Service Line Replacement” project. The ordinance outlines the requested $2,465,000.00 amount of the forgivable loan. The City of Aurora qualifies for principal forgiveness for lead service line replacement and for FY2026 the maximum forgiveness amount is $2,465,000.00.
The proposed 2025 budget shows the partial loan amount for construction of this service replacement project; the City intends to front fund the construction and seek reimbursement at the same time as payments are made to the contractor.
Processing contractor payments significantly quicker in this manner in lieu of waiting for the receipt of loan funds makes the project more attractive to contractors and will most likely result in lower bids.
The State of Illinois passed Public Act 102-0613 in August 2021 titled the Lead Service Line Replacement and Notification Act requiring full replacement of lead water service lines when disturbed. The City of Aurora has an estimated 16,200 lead water services connected to the public water system. The Lead Service Line Replacement Project will include the full replacement of the lead service from the water main to the water meter in the house or the completion of previous partial lead water services to eliminate all sections of lead between the main and meter.
The service replacements per the funding approval must occur in Census Tracts 8542.00, 8529.04, 8532.00, 8536.02, 8530.05 and 8533.00. Passing this ordinance is required by the IEPA to provide the City the forgivable funds necessary to construct this project in 2025 and 2026. The proposed 2025 budget shows the partial value of the forgivable loan in account 510-4058-511-73-02.
By adopting this ordinance, the City will be utilizing available forgivable funds to construct this project. Once completed, the project will reduce the number of lead services lines requiring replacement in the City of Aurora. During construction, there will be various local roadway and lane closures, delays are to be expected. Individual residential water outages will be kept to a minimum while the service is being connected at the water main and inside the house.
•Approval was given to a Resolution authorizing the renewal of the line of credit (LOC) in the amount of $10 million with Old Second National Bank for a one-year term expiring on June 30, 2026.
The purpose is to approve the renewal of the $10 million Line of Credit (LOC) with Old Second Bank for one year.
The City initially approved LOCs with Old Second Bank and Fifth Third Bank in 2019 for $10.0 million. The City has used the LOC’s to provide short-term financing for the City contributions to various land acquisition and economic development projects when bond financing is not practical.
The Line of Credit taken through Fifth Third Bank was paid off during calendar year 2023. The LOC through Old Second is currently the only LOC that the City has outstanding. The LOC was renewed during July of 2024 and that renewal allowed for a subsequent one-year extension of the LOC until June 30, 2025.
There have been no draws on the LOC since the last renewal and the outstanding balance on the Old Second LOC is currently $6,688,000. The LOC will continue to be reduced by payments from bond issuances and repayments of development costs from developers from various economic redevelopment costs initially financed by the City. The city intends to pay off the line of credit once the budget process is complete and it has been determined that there is no additional need for future projects.
The rate for the renewed LOC will continue to be based on the 30-day Secured Overnight Financing Rate (SOFR) + 200 basis points (2%). SOFR is a published rate and is a common replacement for LIBOR in loans moving forward in the past few years. SOFR represents the overnight rate that financial institutions charge each other for overnight loans. The rate generated for the renewed LOC (if calculated today) is currently 6.39% due to the recent increases in interest rates.
Approval of this resolution will renew this ongoing line of credit through Old Second National Bank, which is necessary for the City’s continued project financing when bond financing is not immediately practical.