As Yorkville reauthorizes 1% grocery tax, could it help lower residents’ future water bill increases?

With droves of shoppers expected to flock to Yorkville’s incoming Costco, the generated sales tax is projected to be a huge financial windfall for the city. While authorizing a local sales tax to replace the long-established state grocery sales tax that is expiring, city officials posed an interesting question.

Could the generated sales tax help offset the significant increases residents will soon be seeing on their water bills?

The city council unanimously reauthorized a local 1% grocery tax at their April 22 meeting. This is the same rate that the state has long charged before deciding to eliminate the tax. It is set to take effect on Jan. 1.

Yorkville currently collects about $300,000 in sales taxes annually, which it incorporates into its annual budgets for things like the their street paving programs.

However, Costco is expected to be a game-changer. The grocery store warehouse is estimated to generate more than $1 million in sales taxes annually.

During the meeting, alderman Daniel Transier asked whether the city could use the generated income to offset the town’s water debt service, like Oswego officials have proposed.

“I see this as a rare opportunity that we have not to take more money from our citizens if there’s a way to apply this tax to the water rate increases to minimize that impact,” Transier said.

Overall, water bills are expected to jump significantly for several years to help offset the costs of the $100 million Lake Michigan water sourcing project, a joint project between Yorkville, Oswego and Montgomery.

The city is expected to increase residents’ water rates by an average of 20% over the next five years. By 2030, the typical Yorkville household may be paying more than $100 a month for water, more than double the current cost.

City administrator Bart Olson said the city could definitely decide to dedicate portions of the sales tax revenue stream to offset the water bill increases with a future vote.

“My suggestion would be to first see the impact of Costco to see where its revenue comes in at,” Olson said during the meeting. “We can look at our net revenue at that point and then figure out what we would like to do.”

Olson previously said that reauthorization of the sales tax is a great way to provide stimulus to the city’s budget without making a large dent in the wallets of the town’s residents. This is because signifiant amounts of out-of-town shoppers are expected to spend their dollars at the Yorkville Costco location.

In approving the 1% rate, the city council chose the option to keep the current rate shoppers pay, rather than authorizing either a decrease or increase in the sales tax. Any future changes or re-authorization to the grocery sales tax will be subject to another city council approval.