Oswego trustees direct staff to prepare ordinance to continue 1% local grocery tax

Oswego trustees instructed staff to draft an ordinance to continue a 1% local grocery tax and said staff should return to the board with options for how the revenue would be used.

Andrea, a village staff member, told trustees the state repealed its 1% grocery tax effective Jan. 1, 2026, and that state law now allows municipalities to adopt a local 1% grocery tax by ordinance if adopted prior to Oct. 1, 2025, in order to implement it on Jan. 1, 2026. Andrea said the village received about $914,000 in grocery-tax revenue in 2023 and $967,000 in 2024, and estimated roughly $1,000,000 in 2025 and slightly more in 2026.

The board discussed how to use the revenue if the municipality continues the tax. Andrea said the village faces pressure from police-pension obligations: the current property-tax levy is devoted to the pension contribution but does not fully cover the required contribution, and an additional general-fund contribution is expected. Andrea described options: keep the grocery-tax revenue in the general fund (where it has historically been recorded); direct some or all of the revenue to the water and sewer fund; or apply a portion as a transparent annual credit on residential utility bills. As one example discussed, directing roughly $600,000 back to residents and $400,000 to the general fund would, in staff estimates used in the discussion, balance the budget without cutting services.

Trustees repeatedly framed the choice as one between preserving current service levels and returning money to residents. One trustee — identified in the record as Committee member 2 — said, “I don't see how we can not approve this,” arguing the village will otherwise face cuts to essential services such as snowplowing and pothole repairs. The Chair emphasized that continuing the local tax would not increase residents' tax rates — “we are not discussing a single cent in increase to our taxes” — and said he favored directing some revenue back to households, for example as a $50 annual water-bill credit that would be visible and transparent to residents.

Andrea described how a resident rebate could work from an operations point of view: staff would set up a billing code in the utility system and apply the credit once annually to residential accounts only. For planning purposes, staff estimated just under 12,000 residential accounts. Trustees asked staff to return with specific dollar-amount options and a short timeline for public input.

On timing, Andrea said the only action required now to preserve the option to collect the tax locally as of Jan. 1, 2026, is to adopt an ordinance before Oct. 1, 2025; the board instructed staff to bring an ordinance back on Sept. 16. Trustees left open the question of whether the board will decide how to allocate the revenue at that Sept. 16 meeting or defer a detailed allocation discussion to the October budget workshop once budget figures are finalized.

Trustees and staff noted other considerations: staff said a 15-year-old regional study estimated about half of local sales-tax revenue came from nonresidents, a point trustees invoked in arguing that rebating some revenue to residents would return money originally paid in by visitors. Several trustees also said they would like more community engagement on allocation choices; there were no public comments during the forum portion of the meeting.

The meeting adjourned for a five-minute break before the regular board meeting.