URBANA — Beginning March 1, the food and beverage tax will increase in Urbana from 1.5 to 2 percent.
The Urbana city council voted 6-1 Monday to increase the food and beverage tax, with Ward 6 Alderman Dean Hazen voting no.
Mayor Diane Marlin sought the increase to help close the city’s structural budget deficit of $2.5 million.
“For the past two-and-a-half years, instead of turning only to revenue increases, we’ve spent a great deal of time reorganizing, restructuring, reducing spending, improving efficiencies, looking for ways to save in every possible corner of this building,” Marlin said.
In addition to budget cuts, the city has also imposed a 3 percent tax on recreational marijuana sales and clarified that the 7 percent hotel/motel tax applies to Airbnb and similar services.
The food and beverage tax increase would amount to an additional 12 cents on a $25 purchase and is expected to bring in $400,000 more annually, according to city staff.
But some residents spoke out against another tax increase, such as Riggs Beer Company manager Matt Riggs.
“This is the third (increase) in less than three years that has targeted the core of our business,” he told aldermen last month, referring to the 2017 hike of the food and beverage tax from 0.5 to 1.5 percent and an increase this year to the package alcohol tax, from 1 to 3 percent.
Ward 7 Alderman Jared Miller echoed those concerns Monday, urging council members to “consider especially our local small businesses, who are cornerstones of why people come to Urbana.”
Marlin said she’ll propose lowering the cost of a liquor license for certain license classes, such as for bars, golf courses and possibly hotels and motels.
“Several different classes have gotten, I would say, just out of whack,” Marlin said, so the fee reduction would “give some relief to the business owners.”
The Champaign City Council raised its food and beverage tax from 0.5 to 2.5 percent, with that going into effect Jan. 1.
The 2 percent rate in Urbana will match those in Bloomington, Normal, Decatur and Peoria.
It will be higher than the 1 percent rate in Danville and the 1.5 percent rate in Moline.