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Oswego board votes to retain 1% municipal grocery tax; budget staff to recommend how revenue is used
Summary
The Village of Oswego board approved an ordinance to keep the 1% municipal grocery retailers and service occupation taxes that the state allows, preserving about $1 million in annual revenue. Trustees discussed but did not decide whether to rebate part of the revenue to water customers; staff will return with options at the budget workshop.
The Village of Oswego Village Board voted unanimously on Sept. 16, 2025, to adopt an ordinance retaining the 1% municipal grocery retailers occupation tax and the municipal grocery service occupation tax that state law otherwise would stop sending to municipalities on Jan. 1, 2026.
Dan (staff member) told trustees the grocery tax is a long-standing municipal revenue source and that recent state legislative changes would end the flow unless each municipality votes to keep it. “It is a 1% tax on groceries,” Dan said, adding that the full 1% historically has gone to municipalities.
Board President Ryan Kaufman said the tax is not new and that the village has relied on the revenue. “This is not a new tax…we have relied on about a million dollars a year in revenue,” Kaufman said.
Trustees questioned how the revenue would be used if retained. Staff presented two related items: adoption of the ordinance to retain the tax and a separate discussion about whether some of the roughly $1 million annual revenue should be directed to water-rate relief. Officials noted roughly 50% of grocery-tax receipts are paid by non‑Oswego shoppers; Kaufman and several trustees said that makes the levy a way to collect revenue not borne solely by residents.
Dan said a hypothetical $50 rebate for residential water customers would cost about $600,000 and leave about $400,000 in the general fund under current estimates. He also said the village’s draft FY2026 budget was about $200,000 out of balance if the grocery tax were not retained; last year’s general fund surplus and other reserves are expected to cover major near-term capital work.
Trustees repeatedly urged that allocation decisions be considered as part of the full budget review rather than decided immediately. Several trustees said they were open in principle to rebating or directing some receipts to the water fund but preferred to see the draft budget and water‑rate projections at the October 25 budget workshop before committing to a split.
On a motion to adopt the ordinance retaining both the municipal grocery retailers occupation tax and municipal grocery service occupation tax, the board recorded unanimous ayes from the trustees present and approved the measure.
The board did not adopt a separate policy allocating the grocery-tax revenue at the Sept. 16 meeting. Staff will return with options for how much, if any, of the retained revenue would be rebated to water customers or transferred to the water fund when the village reviews the full FY2026 budget.
