Palatine Village Manager Reid Ottesen.
Palatine will be among the first communities making up for the 2026 sunset of the state grocery tax by imposing its own grocery tax.
The village council approved the tax at its meeting Monday. It will impose a tax on retail sales of groceries on 1% of the gross receipts.
The ordinance goes into effect January 2026, when the state grocery tax ends. The state tax was administered by the state and remitted to local government.
“It was really easy and convenient for the state-elected officials to play a political game and eliminate the tax, notably in an election year when it didn’t have any impact whatsoever on their budget,” Village Manager Reid Ottesen told the council in November, when the local ordinance was discussed. “For local governments, the impact is significant,” he said.
Palatine receives between $1.25 million and $1.5 million a year in grocery tax receipts, he said. These are revenues that directly fund the village’s operations, including police, fire and public works.
“We cannot afford a $1.5 million hole in that budget, especially when the state has failed to restore the local government distributive funds they have taken from us over the years,” he said.
Also at Monday’s meeting, the council passed a balanced $158.7 million budget.
That budget will include funds for a new police community engagement and planning division within the police department. Ottesen said the division will renew the village’s emphasis on neighborhood-based policing.
Ottesen noted this is the first budget in more than 100 years in which the village has not levied taxes for debt service. The village has enough money in the bank to cover remaining bond issues, he said.
The council also passed a $22.5 million property tax levy, identical to last year.