Marengo latest town to consider local grocery tax to replace state tax, which is going away

Marengo is taking up whether to add a grocery tax next year when the state grocery tax goes away Jan. 1, 2026.

According to city documents, the city is floating the idea of adding a 1% tax on groceries sold in town. The loss of the state tax to the city is an estimated $260,000 annually. The City Council is due to take up the measure Monday evening.

In a memo to Mayor John Koziol and the City Council, City Administrator Nick Radcliffe said if Marengo doesn’t implement the tax, “it would place an undue hardship on the city. At a time of rising pension costs, aging infrastructure, and an increasing number of unfunded mandates placed on local units of government by the state, this will cause further financial constraints on the city.”

Radcliffe also wrote that city staff brought up the issue during last year’s budget process, but the city didn’t know how quickly the tax would be enacted.

Passing the sales tax now would allow Marengo to keep the $260,000 in revenues in the fiscal 2026 budget, Radcliffe wrote.

The legislation axing the sales tax also created a mechanism to let municipalities add it back, according to city documents. Marengo city staff recommended the City Council take advantage of that and go for the grocery tax.

Marengo voters last March approved a 1% sales tax by about a 55% to 45% margin. That tax is expected to generate an additional $500,000 that the city plans to use for roads and sidewalks. That tax in place of vehicle stickers.

Marengo is far from the only McHenry County community grappling with what to do about the grocery tax. In Crystal Lake, the most populous community in the county, the City Council raised the local sales 0.5% the same day Marengo voters chose to raise theirs. Crystal Lake has the highest overall sales tax in the county.

Crystal Lake is a home rule municipality, so it didn’t need the voters to say yes. The city passed that tax before the state officially repealed the grocery tax, and Crystal Lake officials promised to drop the tax 0.25% if the state didn’t eliminate its tax.

Crystal Lake officials expected the grocery tax repeal would cost them $1.5 to $2 million per year, while the new sales tax could generate $4.5 million per year.

Suburban leaders have criticized Illinois Gov. J.B. Pritzker for his plan to repeal the grocery tax, which benefits local communities.

Other municipalities, including Cary, also have looked into adding the sales tax. Marengo City Council will take up the issue starting at 7 p.m. Monday at City Hall, 132 E. Prairie St.