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Oswego board keeps 1% municipal grocery tax, asks staff to propose rebate and water‑rate options
Summary
The Village of Oswego voted to retain the existing 1% municipal grocery tax that would otherwise expire on Jan. 1, 2026, and directed staff to present options for how to allocate revenue — including a water‑bill rebate — at the October budget workshop.
The Village of Oswego Board of Trustees voted on Sept. 16 to retain the municipal grocery retailers and grocery service occupation taxes that otherwise would lapse under state law on Jan. 1, 2026. The ordinance keeps the 1% grocery tax in place after a brief debate over how the revenue should be used.
Dan (staff) told the board the grocery tax is a longstanding municipal revenue source and that "the grocery tax goes away unless municipalities vote to keep it." He said the village typically receives about $1,000,000 a year from the tax and that roughly half of that amount is paid by shoppers from outside Oswego. President Ryan Kaufman said the village has relied on that revenue "for 35 years" and described the choice as whether to keep the revenue stream or cut services.
Trustees discussed multiple options for directing the revenue: keeping it in the general fund to reduce pressure on the property‑tax levy; allocating some or all to the water fund to offset rising water costs tied to the Lake Michigan water project; or providing a direct, temporary rebate to residential water customers. Staff presented a numerical example in which a $50 rebate for residential customers would cost roughly $600,000 and leave about $400,000 in the general fund. In the draft FY2026 budget presented to trustees, staff said the village would be about $200,000 out of balance if the grocery tax were not retained.
A trustee moved to adopt the ordinance retaining the municipal grocery retailers and grocery service occupation taxes; another trustee seconded the motion and the board approved it by roll call. The vote preserved the village's gross grocery‑tax receipts while the board directed staff to return with concrete allocation scenarios at the board's Oct. 25 budget workshop so trustees can decide whether to rebate funds to residents, send a portion to the water fund, or retain the revenue in the general fund.
The board's next procedural step is the budget workshop, where staff will provide options and the financial detail trustees requested. Until then, the grocery tax will remain part of the village's FY26 revenue forecast.
