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Oswego trustees direct staff to draft ordinance to retain 1% grocery tax, debate dedicating revenue to water fund
Summary
Trustees told staff to return with an ordinance to consider keeping the 1% grocery tax that the state will repeal in 2026; discussion centered on whether to retain the revenue to lower future water-rate increases or let the tax sunset and provide immediate relief to shoppers.
Chair opened discussion on whether the village should seek authority to keep a 1% local grocery tax after the state repeal and asked staff to return with an ordinance for future consideration.
Resident Ed Bradley urged keeping the tax and dedicating proceeds to the water-and-sewer capital fund, saying the 1% has been in place about 35 years and that the April 8 water-rate study favored scenarios that used grocery-tax revenue. “The village should definitely continue to collect this 1% grocery tax,” Bradley said, and recommended dedicating receipts to the water and sewer capital fund for at least five years.
Andrea, a village staff member, reviewed the statutory timeline and fiscal numbers: recent legislation repeals the state grocery tax effective Jan. 1, 2026 while allowing municipalities to retain the revenue if they pass an ordinance and file with the Illinois Department of Revenue by Oct. 1. Staff reported calendar-year 2023 SIC-code food receipts of about $913,000 and estimated grocery-tax receipts for 2024 between $1,000,000 and $1,250,000; staff said additional analysis would be needed to isolate residential-only impacts.
Trustee Kurt proposed a variant: create a permanent fund seeded with an initial allocation (he used $250,000 as an example) that would immediately offset some residential water bills while allowing the principal to grow and later use interest earnings. “You keep putting the money into the fund, but every year, at least the $250,000” would be applied to water bills until interest could cover that amount, he said.
Other trustees pushed back on coupling the grocery tax and water-rate policy. One trustee argued the grocery tax would become effectively “a new local tax” even if residents were already paying it at the state level and said the village could afford to let it sunset; another said keeping the tax would help stabilize long-term revenue and blunt future rate increases. The chair said he was undecided but insisted that, if retained, the tax should be dedicated to water-only purposes.
Staff gave fiscal context: Andrea said the water fund’s FY24 user fees were about $9.1 million and currently sit around $10.2–$10.4 million, and she noted that some grocery-tax revenue would initially build fund balance to meet near-term debt-service and WIFIA requirements rather than immediately lower rates dollar-for-dollar.
There was no formal vote. Trustees gave staff direction to return with an ordinance to consider retaining the 1% grocery tax and to continue analyzing allocation options and the projected impact on water rates; staff indicated a July target for passage would leave time to meet the Department of Revenue filing deadline.
The Committee of the Whole recessed for five minutes before the regular board meeting.
