Illinois’ doubling of the state gas tax on Monday was evident at gas pumps last weekend, as motorists lined up to top off their tanks.
But the increase in the state’s motor fuel tax – from 19 cents a gallon to 38 cents – will hit a lot of consumers, not just those who own vehicles. Businesses are just now working through how they’ll pay for it, but the early read is that, like most things, their increased costs of doing business will trickle down to customers.
The garbage hauler
Waste haulers, who maintain large fleets of gas-guzzling garbage trucks, plan to pass the added cost along to consumers as soon as possible.
Most garbage trucks burn diesel fuel, which saw an even higher 21.5 cent-per-gallon tax increase kick in Monday, bringing the total state tax to 44.5 cents per gallon.
Lakeshore Recycling, which has 225 residential and commercial garbage trucks working in Chicago and the suburbs each day, will see its costs rise by at least $1 million annually, said CEO Alan Handley.
The Morton Grove company services 350,000 residences and 30,000 businesses, including all Chicago Public Schools, and empties the garbage cans in suburban communities. Both residential and business customers will likely pay the tab for the state’s fuel tax increase, Handley said.
“The cost has to be passed along,” Handley said. “We can’t absorb all that.”
Passing along the cost to consumers is also the plan at Maywood-based Roy Strom Refuse Service, whose fleet of 50 garbage trucks burns about 2,500 gallons of diesel fuel a day, meaning the state’s tax increase adds about $600 a day in new costs.
The family-owned company services about 25,000 households through municipal contracts with six western suburbs of Chicago, including Villa Park, River Forest and Summit. It also hauls away waste for more than 2,000 business customers in Cook and DuPage counties.
Passing along the added costs to businesses will be as simple as adjusting the fuel surcharge on their invoices, Vice President George Strom said.
Residential service, which usually runs through municipal contracts, may be a little more complicated, but both companies plan to work with communities to pass along the increased fuel tax as soon as possible.
At Phillip’s Flowers & Gifts, Executive Vice President Baxter Phillip said he isn’t increasing the delivery fee immediately but anticipates it’ll rise by a dollar or so in the next year.
“We’ve had to increase it a few times in the past 10 years by a buck,” he said. “Trucks are more expensive, fuel’s more expensive, drivers are more expensive, insurance is more expensive. … Everything goes up slowly. We try to keep a lid on it.”
The dry cleaner
Mike Bleier, owner of Drive Cleaners in Skokie said his prices will likely rise.
The business doesn’t charge a pickup or delivery fee for customers but the cost of that service is factored into the overall pricing.
Bleier still needs to calculate what the new gas tax will cost him, but said he’s had to raise prices 3% to 5% in the past for other business costs.
“For the most part, customers understand,” he said. “(But) every price increase is always a tipping point for some.”
The food delivery driver
Ride-share companies Uber and Lyft have not raised fares, but food ordering and delivery companies plan some adjustments.
Grubhub does not plan to raise delivery fees, but its delivery drivers will likely see their pay increase, said spokeswoman Katie Norris.
Chicago-based Grubhub uses algorithms that factor in local gas prices, taxes and other components to calculate how much drivers are paid.
“We’re always balancing it,” Norris said. “We’ll definitely look to make sure the mileage rate in the markets … impacted in Illinois still makes sense with the change.”
Some of the restaurants on Grubhub’s platform employ their own delivery drivers, who would not be subject to Grubhub’s changing payment rate.