O’Fallon may get relief from 1% grocery tax. But when?

Residents may eventually see some relief from their grocery tax, but that change may not arrive for three years.

The city will continue collecting a 1% grocery tax, but city officials will be required to revisit whether the tax is necessary by April 30, 2028.

Citing his belief that the city’s revenue will continue to grow—with large developments expected in the next few years—Alderman Todd Roach proposed a “sunset” provision to the tax. The amendment, requiring a council vote on the tax’s future, passed in an 11-3 decision.

The O’Fallon City Council must now vote to retain the tax before the new fiscal year budget takes effect each May 1. If the council does not approve keeping it, the tax will expire and residents will no longer see it on their grocery store receipts.

“This is an opportunity for people to see a little bit back in their checkbooks,” Roach said. “We can revisit the city’s needs in two years and the new revenue we are generating.”

Currently, shoppers at Aldi, Schnucks, Sam’s Club, and Walmart in O’Fallon are affected by the grocery tax. Roach referenced Meijer’s upcoming entry into the market, with plans moving forward for a 159,670-square-foot store featuring groceries, a home department, garden center, drive-through pharmacy, and store pickup area.

“On average, Meijer generates $81 million per year. If we get 2% sales tax, that’s $1.6 million from Meijer alone,” Roach said.

He also noted two more hotels will open soon, and that new developments at Park Place, Central Park, Old Base Factory food hall and other businesses will contribute to city revenue.

“I’m confident we will be generating more revenue, so we can revisit our needs,” he said. “We’ll have more apartments, more visitors, and likely will see a population increase in the next census.”

Roach previously opposed the city’s decision to continue the grocery tax after the state eliminates its own version on Jan. 1, 2026.

“This is a tax burden on our most vulnerable,” he said. “We all need food—it’s essential.”

He also noted that state taxes on gas and utilities have risen, affecting residents further.

Aldermen Dennis Muyleart and Tom Vorce joined Roach in expressing concern about the impact on residents facing financial difficulties, urging the city to consider alternative revenue sources.

The council adopted the retention ordinance at its July 21 meeting, which must be recorded with the Illinois Department of Revenue by Oct. 1.

Aldermen supporting retaining the tax cited a need to maintain city services funded through the $1.2 million generated annually by the grocery tax. Finance Director Sandy Evans previously reported the tax is crucial for city operations, supporting public safety, public works, and community development.

“This is drainage projects, street repairs, the Venita Bridge widening, Highway 50 improvements, adding a police officer, Downtown District streetscaping,” Evans said at a finance committee meeting.

Roach said he understands that other aldermen did not want to see services cut, and he doesn’t either. “We just wanted to see if they could find another way,” he said.

The Illinois General Assembly approved repealing the state grocery tax in May as part of Gov. J.B. Pritzker’s fiscal year 2025 budget, citing the measure’s impact on low-income families. However, a provision in the state budget bill allows municipalities to implement their own local grocery taxes, without voter approval, to replace lost revenue the state has distributed for 35 years.

“This is not a new tax. It will be the same dollars on the grocery bill; there will be no difference,” Evans said.

Low-income residents who receive SNAP and EBT benefits are not taxed for groceries.

In addition to police and streets, the city’s general fund supports MECOMM, pavement management, and unfunded capital improvement plan projects. The city’s ordinance is based on a draft from the Illinois Municipal League, which recommended municipalities keep the tax.

For the “sunset” amendment, Aldermen Jim Blackburn, Jim Campbell, Roy Carney, Andrea Fohne, Jimmy Ford, Aaron Hudson, Jessica Lotz, Curtis Newcomb, Muyleart, Roach, and Vorce voted in favor of revisiting the tax after the city has had an opportunity to evaluate new development’s benefits.

Aldermen Nathan Parchman, Ross Rosenberg, and Martha Stoffel opposed the measure.

After the meeting, Parchman, who chairs the finance and administration committee, said he stood by his stance from earlier discussions.

“The funds from this tax are used for essential city needs that positively impact all of our residents and visitors,” he said. “The governor is preparing for a run at president, and this would look fantastic as a headline for reducing taxes under his term. Both parties make changes like this to improve their reputations, but no one looks behind the headlines to see that every community in Illinois just had large sums of tax revenue pulled out from underneath them unless local officials decide to keep it. So essentially it makes every city council in the state look like the bad people that don’t care about their citizens.”

Parchman agreed the city could maneuver funds and avoid hurting operations, but warned about future concerns.

“The issue is, future projects and plans that residents would like to see could be delayed because city reserves will be negatively impacted. This topic can be argued from many angles, but if you ask why I voted no, this is why,” he said.

He also addressed the city’s reserves.

“We are saving approximately $3.7 million on average in our reserves if you look back and average it over the past four years. For our city of 33,000-plus, that’s not much if we ever face an economic downturn or want to fund large future projects like our 2040 Plan, Highway 50 Street Improvement Plan, or the five-year capital improvement plan.

“Our staff does an amazing job and must have funding sources to keep our city competitive and growing as we compete with Edwardsville, Glen Carbon, and many others on the Missouri side of the river. Without reserves, we’d have to bond funds and pay more in interest in the future.

“I like to see a city run as close to a household budget as possible, and putting money in your TSP, 401(k), HSA, savings account, or Christmas/vacation fund is essential for a solid budget,” he said.

Mayor Eric Van Hook expressed appreciation for the council’s discussions.

“One of the great things is that the system is designed for people to express their opinions and look at new ways to help residents,” he said.

This story was originally published August 4, 2025 at 6:00 AM.