Kane County Board OKs gas tax hike, grocery tax extension

As budget discussions continue, the Kane County Council recently discussed — and narrowly approved — two tax proposals intended to generate revenue for the county.

The two measures include an increase in the county’s current fuel tax from five cents per gallon to eight cents per gallon, and a 1 percent grocery tax replacing the state grocery tax that expires Jan. 1. Both are expected to go into effect in the county on July 1.

The measures come as the County Council debates how to resolve a budget shortfall it has faced in its general fund in recent years, and as the deadline to approve a fiscal 2026 budget approaches.

In recent years, the board has solved its budget problems by dipping into the county’s cash reserves. Last year, for example, the budget was balanced thanks to the planned use of about $27 million in general fund reserves, according to past reports.

But if revenues and expenses were to remain flat, county Finance Director Kathleen Hopkinson warned the county would have to make significant cuts or find new revenue before 2027 to avoid dipping into its required 90-day reserves.

So after the sales tax referendum failed in April, county board members were tasked with finding new revenue or cutting costs to avoid spending the county’s reserve funds.

They considered a hiring freeze, reallocated some of the county’s Regional Transportation Authority sales tax funds to public safety and asked county departments and offices to cut their individual budgets by about 8 percent compared to last year.

The board-approved gas tax increase is expected to generate more than $6 million a year, according to board member Verner Tepe. At the Kane County Board of Supervisors Finance Committee meeting Tuesday, Tepe explained those funds would go to the Kane County Transportation Division.

The money would fund the operation, construction and improvement of public roads and waterways in the county, as well as the county’s ability to acquire property and rights-of-way for public roads and waterways, according to the measure.

This is essentially meant to replace funding that the Kane County Division of Transportation was set to lose this year due to a different measure passed by the board earlier this year. In August, the County Council voted to reallocate 25% of the Regional Transportation Authority sales tax funds the county receives from transportation to public safety, according to previous reports. This meant the county Transportation Division had to receive significantly less RTA funding to pay for its expenses this year.

However, Tepe said the board could later vote on a measure to allocate an additional $4 million in RTA funding to the transportation sector and general fund to pay for public safety expenses because changes to the budget are still pending.

Kane County Board Chair Corinne Pierog asked if diesel vehicles would be included in the tax, and a county spokesperson later confirmed they would.

After being advanced by the Finance Committee on Tuesday, the Executive Committee took up the issue of the gas tax, with Tepe emphasizing the need for additional revenue to move the budget forward, even as more changes are coming.

Then, brought forward by the executive committee, the topic sparked significant discussion at the full Kane County Board of Supervisors meeting later Wednesday.

Board members David Young and Myrna Molina criticized the proposal, while board member Michelle Gumz defended it, suggesting the board is not “keeping up its end of the bargain” in terms of seeking additional revenue while asking county departments and offices to make cuts.

And Tepe also expressed support for the proposal, presenting it as a sort of last-ditch effort to balance the budget.

“If we don’t raise the gas tax, we don’t know what to do,” Tepe said. “And I mean, when I say we don’t know what to do, we don’t know what to do.”

Board member Deborah Allan suggested the board’s budget problems stem in part from county departments and offices becoming accustomed to programs funded by grants the county has received in recent years.

“This is the first time in my tenure,” Allan said, “that I’ve seen a board say, ‘The rubber meets the road here. And we just can’t afford to fund it all.'”

But, when it came to the gas tax, she suggested the Kane County Transportation Division wouldn’t have needed the money if the board hadn’t diverted RTA funds away from transportation, and expressed concerns about the cost of gas to her constituents.

Board member Anita Lewis said she supports the auto fuel tax because her constituents value the services the county provides, especially those aimed at public safety.

And board member Jon Gripe asked whether the reserves could be used if the fuel tax fails, but Tepe said it was likely the reserves would fall below the required amount.

“All you do is focus on the gas tax,” Tepe said. “We are focused on the budget.”

Board member Leslie Juby said there are enough funds to account for what the fuel tax would generate.

Ultimately, the measure passed with nine board members voting for and eight against. Hopkinson, during the meeting, said the tax increase would not take effect until July 1.

The council also considered instituting a 1% grocery tax, as the state tax expires on January 1.

At Wednesday’s board meeting, Hopkinson explained that the measure was essentially intended to keep the existing tax on groceries in place, rather than instituting a new tax. The tax is estimated to raise between $40,000 and $400,000 a year, she said.

This measure also narrowly passed the board of directors on Wednesday. This tax will also come into effect on July 1.

mmorrow@chicagotribune.com