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Homewood, Flossmoor mayors relieved at outcome of state grocery tax repeal

The state budget approved May 29 by Illinois legislators included the repeal of the 1% tax on grocery purchases, something municipal leaders opposed because revenue from the tax passed through to local governments. The final version of the repeal included compromises that will soften the blow to municipal budgets

Flossmoor and Homewood officials weighed in on the issue in recent weeks.

The Flossmoor Board of Trustees passed a resolution on April 1 imploring the state to retain the tax. Village finance officials estimated the elimination of the tax would cost about $200,000. 

Homewood trustees did not pass a formal resolution, but Mayor Rich Hofeld said he had been in contact with legislators to advise them about the detrimental effect the repeal would have on municipal budgets. He said he was personally in favor of helping consumers, but to be fair to municipalities, the state should offer some way to compensate for the loss.

Homewood stood to lose about $650,000.

Flossmoor Mayor Michelle Nelson said the state’s concessions would help the village adapt. 

“The fact that it doesn’t go into effect in January 2026 is good. Originally, they were thinking about having it go into effect immediately,” she said. “The problem with that is that village budgets for the following year are already set, and they were based on having that income stream. To take away that income stream after budgets are approved would really been tough on municipalities.”

Another concession made by the state was to allow non-home rule municipalities, which include Homewood and Flossmoor, to create their own 1% grocery tax to make up for the lost revenue from the repeal of the state’s tax. 

Hofeld said Homewood would have to consider taking that step.

Nelson said local government officials had hoped the state would boost the rate of income tax revenue that is shared with municipalities through the Local Government Distributive Fund. 

For more than four decades of the LGDF program, 10% of personal income tax revenue was shared. The rate was cut in 2011 to 6%, according to the Illinois Municipal League. In 2024, the rate was 6.47%, the highest it’s been since 2011. 

The rate will remain the same in 2025. LGDF also distributes portions at a slightly higher rate from corporate income tax revenues.

IML has been lobbying for years to have the rate returned to the original 10%. Nelson and Homewood Village Manager Napoleon Haney credited IML and other local government lobbying groups for helping win the compromises in the grocery tax repeal.

Nelson participated in a press conference on May 20 attended by 50 mayors to call for the state to increase funding to local governments.

Hazel Crest Mayor Vernard Alsberry, representing the South Suburban Mayors and Managers Association, was one of the speakers at the event.

“My community of Hazel Crest has lost over $10 million in LGDF since 2011, while at the same time we’ve faced over 1,600 unfunded mandates since I was elected in 2013,” he said. “Unfunded mandates passed by the General Assembly each year must be recognized as a significant contributor to the growing property tax burden in Illinois, as municipalities struggle to find and dedicate funds to implement laws imposed by Springfield.”

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