Finance committee advances $108.4M FY2026 budget to council; approves ordinance allowing optional amusement tax for redevelopment projects

The O'Fallon Finance and Administration Committee on Monday voted to forward the city's FY2026 proposed balanced budget, a set of proposed code changes to permit an optional amusement tax for certain redevelopment agreements, and related items to city council.

The committee approved forwarding a $108,436,554 balanced budget to council for formal readings; staff said the figure includes interfund transfers and that the budget without interfund transfers is about $98,000,581. Committee members praised staff for a multi-department budget review and the lower total compared with the prior year; one committee member said she would support the budget while dissenting on a $50,000 allocation for a residential façade program.

Votes at a glance - FY2026 annual budget (motion to approve): forwarded to council for first reading. Roll-call in committee recorded affirmative votes by committee members present (transcript roll call recorded names and yes votes). Outcome at committee: approved to proceed to council for first reading. - Ordinance to codify an amusement tax (Finance agenda item 2.2): the committee approved forwarding an ordinance that would allow the city to include a 5% amusement tax in redevelopment agreements for specified entertainment uses where a developer requests it; the measure was forwarded to council on first reading.

Key finance items and staff notes - Budget: Staff described the FY2026 budget as balanced at $108,436,554 (total) and noted the $98,000,581 figure when removing interfund transfers. Adjustments since the February draft include additions to a Bill O'Fallon Trust Fund, a cleanup in the fire department cash-reserve accounting, and an increased estimated cost for the Woodstream Bypass. Staff highlighted a capital "large spend" list that, if approved in the budget, does not require individual future council approval for each listed project beyond standard purchasing rules (bids/purchasing manual still apply). - Amusement tax: Staff described a proposed amendment to the city code to allow the council, within redevelopment agreements, to permit certain businesses to collect a 5% amusement tax on customers for specific entertainment services (rock-climbing, golf bays, indoor entertainment) when those businesses opt in via a redevelopment agreement. Under the proposal discussed in committee, the tax is not citywide on this use by default; it applies only if a developer or business requests the tax as part of a redevelopment agreement. The intent is to allow developers to recover upfront infrastructure costs by collecting the tax locally and using those receipts to reimburse eligible public-infrastructure expenditures over time under the state business-district statute. - Tax levy update and abatement plan: Staff updated committee members about a state pilot reimbursement for disabled veterans that had not been included in the governor's proposed state budget; staff recommended abating $50,000 per year for five years to return the one-time received funds to taxpayers gradually. Staff said county final extension numbers were pending and that abating $50,000 this year would alter the estimated tax rate compared with earlier projections. - Emergency sewer-line repair: Staff reported an emergency repair and planned permanent relocation for a segment of the north sewer trunk main that failed during a storm on Oak Hill School Road. Estimated construction cost: approximately $500,000 for about 0.5 miles of replacement; staff said the amount exists in the capital budget because funds from a Woodstream project were available. The repair proceeded under the purchasing manual emergency-procurement allowance; staff notified the committee as required. - Push tax update (video gaming terminal penny-per-push tax): staff updated the committee that an appellate court ruling in favor of Waukegan has reduced legal uncertainty; the city adopted a push tax ordinance in October 2021 with an effective date in May 2022 but had held enforcement pending litigation. Staff said the Illinois Municipal League advises municipalities that now have ordinances in place that they may proceed if they wish; the committee will consider implementation at a future meeting and staff does not know expected revenue without usage data.

Public comment and specific concerns - Committee members and the public asked clarifying questions on the amusement-tax mechanics and whether the tax would be mandatory. Staff emphasized the tax is optional and applies only where the developer requests it in a redevelopment agreement and where state statute permits reimbursable infrastructure costs. - A resident asked whether the amusement tax would be retroactive; staff said it cannot be retroactive and would have a start date set by ordinance/implementation.

Next steps - The budget and the amusement-tax ordinance were forwarded to city council for first reading (council first reading scheduled on April 7). Staff said the budget will then follow the normal public-hearing and two-reading ordinance process with a council final reading later in April.

Speakers quoted or referenced in this article: Sandy (staff presenting budget and finance items), Grant (staff presenting amusement-tax background), Jessica Lott (councilmember), Jim (councilmember), Jeff Taylor (public works), public commenters including Vern Wire and Burr/Burmoyer (identified in transcript as commenters).