Mayors, and some Republicans, walk into Pritzker's trap on grocery tax

“Mayors slam Pritzker’s proposal to eliminate grocery tax” was the Daily Herald’s headline above a story last week about several mayors of upper-income suburban communities complaining about a proposed tax cut.

I don’t know if the mayors quite understand this, but headlines like that are basically an in-kind campaign contribution to the governor and the Democratic supermajority. The fact that Rep. Marty McLaughlin (R-Barrington Hills) was the center of that press conference arguing against a tax cut, even though he will face a hard-charging Tier One opponent this fall, just makes it even weirder. McLaughlin walked it back later in the week, but the damage was done.

This grocery tax elimination proposal is a pretty darned solid play by Gov. J.B. Pritzker on multiple political and legislative levels. Whether it’ll become an actual law is, at this early stage, almost beside the point. And whether it’s wise is quite another story.

The “best” part is that this is a state tax cut that doesn’t cost the state budget a dime. You just can’t ask for more than that in this business. The money raised by the tax is collected by the state and then distributed to local governments.

It’s also a regressive tax, which hurts people at the lower rungs of the income ladder. As one top Senate Democrat told me recently, eliminating a regressive tax allows the governor and the General Assembly’s Democrats an opportunity to play the good guys for a change.

The proposal has divided the Republican Party, which has to delight the Democrats. On the one hand, you had people like McLaughlin, providing fodder for whoever writes the direct mail in his opponent’s campaign. On the other hand, you have Rep. Blaine Wilhour (R-Beecher City), who is facing a primary challenge and knows better than to oppose a tax cut. Wilhour said this to his local newspaper: “The penny tax on groceries is punitive for working families, and we should end it in Illinois.” Smart dude.

The tax cut is easy to explain and is therefore receiving a lot of news media coverage. Everybody in politics loves issues like this, even if they’re not all what they seem to be. A bipartisan tax cut that also puts some Republicans in a trick bag, including some politically vulnerable members? Sure, sign me up.

What about the income tax, though?

And the more attention this $325 million tax cut receives, the less time reporters will have to flesh out the governor’s fast move on the income tax. Instead of allowing the standard income tax exemption to rise to its previously inflation-tied statutory levels after freezing it for a year, the governor proposed saving the budget some money by not giving people their fully entitled exemption this year. That technically qualifies as a tax hike, but is not so easy to explain.

The Illinois Municipal League was all set to play some big splashy offense this year by again pushing to raise the percentage that local governments receive from state income tax collections. But, for now at least, the League is forced to play defense against a popular idea.

The governor and some Democrats have pointed out that the legislature could give local governments the ability to impose their own grocery taxes, which the mayors definitely do not want to deal with (they’d much rather the state impose a regressive tax than them). So, convincing the Democrats to drop the idea could mean the Illinois Municipal League might have to withdraw its own proposal, or something in between.

The grocery tax elimination also whacks the City of Chicago’s budget by $60 million to $80 million, according to the city’s estimates. Remember how Mayor Brandon Johnson reneged on his pledge last month to partner with the state and Cook County to provide $70 million in funding to maintain migrant services? At the very least, this Pritzker proposal puts the rookie mayor on notice that there are multiple strings that can be pulled on him.

In the end, I’m not certain this will actually pass, but it’ll be fun to watch for a while anyway. Few legislators care about Barrington’s budget, but they do care about the burden this could put on poorer communities and on Chicago. Not to mention that narrowing our tax base is a huge mistake this state has repeatedly made for generations.

However, I also don’t get the impression that Democrats are in much of a hurry to resolve the issue because they can continue soaking up the publicity, courtesy of the mayors and some Republicans.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.

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