Oswego Committee of the Whole Meeting - April 22, 2025: Grocery Tax and Historical Property Discussion
Oswego Committee of the Whole Meeting - April 22, 2025: Grocery Tax and Historical Property Discussion
The Village of Oswego held a Committee of the Whole meeting on April 22, 2025, at 6:00 PM. The primary agenda item was a discussion on whether to continue the local 1% grocery tax after the state repeal, with a focus on potential revenue allocation to water and sewer infrastructure. The board also heard public comments on both the grocery tax and a historical property designation. No formal votes were taken; staff was directed to bring back an ordinance for further discussion at a future meeting.
Public Comments & Testimony
- Ed Bradley, a 19-year resident of Oswego, recommended the village continue collecting the 1% grocery tax and dedicate the revenue (estimated at $1 million in 2026) to the water and sewer capital fund for at least five years. He supported Scenario 2 from the April 8 rate study, which provides the lowest annual cost to residents through 2030. He opposed investing the revenue for future use, preferring immediate benefit to current residents.
- John Bodemus, owner of a historic property at 2470 State Route 31 (the former Schickler's dairy barn, circa 1850), requested the village reconsider its exclusion of his property from historical designation due to being outside village limits. He noted the property is within Oswego's 1.5-mile extraterritorial jurisdiction and asked for recognition of its historical significance, separate from annexation considerations.
Discussion Items
- Grocery Tax Continuation Options: Staff presented background on state legislation repealing the 1% grocery tax as of January 1, 2026, but allowing municipalities to maintain the revenue locally by passing an ordinance before October 1, 2025. Comparable communities (Montgomery, Yorkville) are approving the tax; only Lily Lake (likely no grocery stores) indicated not passing it. The village collected approximately $913,000 in food-related sales tax in 2023 and an estimated $1–1.25 million in 2024.
- Revenue Allocation Scenarios: Several options were discussed:
- General fund (current practice) – supports police and public works.
- Permanent fund (proposed by Trustee Kurtz) – invest the revenue, use only interest earnings for water rate relief; at 3% interest, it would take 18–19 years to generate $1 million annually.
- Hybrid approach (Trustee Kurtz's refinement) – immediately apply $250,000/year to water bills until interest earnings match that amount, then use interest only.
- Dedicated water/sewer capital fund – use revenue directly to reduce water rate increases (Scenario 3 vs. Scenario 4 shows a $3.56 savings per 10,000 gallons used, compared to a $2 cost on a $200 grocery bill).
- Trustee Positions:
- Trustee Geist expressed strong opposition to creating a new local tax, arguing the village is in a strong financial position and should let the state repeal take effect. He preferred addressing water rates separately.
- Trustee McCarthy Lang noted the tax has been in place for decades and recommended keeping it to offset water rate increases, but only if the revenue is dedicated to water.
- Trustee Kerr was undecided but leaned toward keeping the tax if it meaningfully impacts water bills; he emphasized the need for more data on the actual savings.
- Trustee Kurtz advocated for keeping the tax and creating a dedicated fund that would eventually cover residents' water bills, similar to a sovereign wealth fund, to build long-term village financial stability.
- Water Rate Context: Water user fees were $9.1 million in FY24, now approximately $10.2–10.4 million, and will continue rising with population growth and Lake Michigan water connection costs. A fund balance requirement (debt policy) absorbs part of the grocery tax revenue, reducing direct rate impact until 2031.
Key Outcomes
- Direction to Staff: The board gave preliminary direction to bring back an ordinance to continue the local 1% grocery tax for further discussion at a future meeting (likely June/July 2025). No final decision was made on whether to pass the ordinance or on the specific allocation of revenue.
- Next Steps: Staff will prepare additional analysis on the grocery tax's impact on water rates and present detailed options for revenue use. The board will revisit the topic before the October 1, 2025 filing deadline.
Meeting Transcript
All right. Uh welcome to our committee of the whole roll call, please. Sorry, President Kaufman. Here. Trustee Geist. Present. Trustee Kerr. Present. Trustee McCarthy Lang. Present. Trustee Novi absent, Trustee Torres absent, and Trustee Jones absent. All right. First up, we will open the public forum. If there's anybody wishing to speak, please come forward now. And we do have one, and I see another incoming green slip. So I'll take these in the order in which I receive them. Uh so Mr. Ed Bradley, if you'd like to come down, sir. Welcome, sir. This is on. Yeah, it is. Good evening. I'm Ed Bradley. My wife Carol and I have been residents of Oswego since building our home here in Steeplechase 19 years ago. Your agenda tonight calls for discussion of what action the village wants to take when the state grocery sales tax is eliminated. I heard some comments on this topic from various trustees at the April 8th board meeting, and I'd like to add a few comments for consideration tonight. This 1% tax has been in place for about 35 years, initially established as part of the state sales tax reform that took place in 1990. It was briefly suspended in the post-COVID time frame, but has been back in place for nearly two years now. With the state of Illinois permanently rescinding this tax next January, but allowing local governing units to continue to impose this tax. There are really two questions that must be answered. First, the board must decide on whether it wants to continue to oppose this tax on the shoppers in Oswego, on the grocery shoppers in Oswego. If the answer to this question is no, the discussion is over. However, if the answer is yes, then there must be more discussion to decide the question on how the revenue from this tax will be used in the future. I believe there are circumstances with this tax that makes it different. Most surrounding communities appear poised to continue to collect this tax. While it may seem attractive to be the low man around, people will not likely change their grocery shopping habits as a result of the tax. Not having this tax in Oswego would probably not result in any increase in grocery sales, and if it did, the village would get no tax revenue anyway because there would no be there would be no tax in place. If the tax retention answer is yes, then decisions must be made on the best future use of this revenue stream. The concept of dedicating it to the water and sewer capital fund is my strong preference. Provided three different rate scenarios. Two of them, scenario two and scenario three, have factored in the use of grocery tax revenue estimated at a million dollars in 2026. Each of these was superior to scenario one, which did not factor in use of the grocery tax revenue. The best of these scenarios, in my opinion, is scenario number two, which meets all the funding requirements and provides the lowest annual cost to residents for each year up through 2030. I won't go into further detail on that until the board is actively considering proposed rate adjustments. While this is a great concept, if you are growing an IRA, it still leaves the current residents of Oswego with the need to fully fund the current capital needs for a public utility that will be in place for many generations to come. I'm opposed to taking this approach. If we're simply going to invest it for use at some unknown point down the road, I'd rather not even have the 1% tax. I'll do my own investing for the future. In summary, I recommend that the village continue collection of the current 1% grocery tax starting in 2026, that necessary language be adopted to see that the revenue from this tax be dedicated to the water and sewer capital fund for at least the next five years five years, and that adjustments to the water and sewer rates follow the general guidelines outlined in scenario two in the April 8th rate study, including keeping the monthly or the bi-monthly fixed fee unchanged at least through 2029. Thank you much.
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