Oswego hikes taxes on fuel and prepared food and beverages

The new taxes are planned to pay for road maintenance and improvement as well as general use. As is the case in communities throughout Illinois, pension costs are crowding out other spending in Oswego.

Oswego residents will be paying more for their local government as two new village taxes – one on fuel and another on food and beverages – come to pass.

Oswego village officials say the new $0.04 per gallon tax on motor fuel would bring in around $600,000 annually, while the 1 percent tax on food and beverages would generate $500,000 a year, according to the Aurora Beacon-News. Oswego trustees voted unanimously for the new taxes.

The tax on food and beverages will be imposed on food and drinks prepared for immediate consumption. Officials have said the fuel tax revenues will be used for road improvement and maintenance, while money raised from the food and beverage tax will go toward general use by the village, according to the Beacon-News.

The impetus for the new taxes is, in part, the state’s new budget, which includes $416,000 less in state funds for Oswego for the current fiscal year, and $116,000 per fiscal year going forward, the Beacon-News explained.

Oswego Village Administrator Dan Di Santo said there are problems with revenues across the board, the Beacon-News reported. Di Santo also said low residential growth has taken a toll on the village budget, according to the Beacon News.

As in communities throughout the state, pension costs are crowding out other spending in Oswego. Adjusting for inflation, the village’s contributions to its police pension fund nearly tripled between 2005 and 2014, to over $1 million annually, according to the Illinois Department of Insurance.

Oswego’s firefighter pension costs are also growing. In 2008, the city transformed its contracted firefighters into a full department with pension benefits. Since then, pension costs have jumped 59 percent after adjusting for inflation, to nearly $1 million in 2014.

Supporters of the new Oswego taxes point to nearby municipalities, such as Aurora and Naperville, which have both already implemented fuel taxes and food and beverage taxes.

While it’s easy to sympathize with Oswego’s predicament, policymakers should remember the potential pitfalls of imposing new taxes. Illinois motorists already face taxation at the pump at the federal, state and local levels. In addition to the federal tax of $0.18 per gallon, Illinois drivers have to pay a state excise tax, an environmental tax and sales tax on gasoline. This is unlike most states, where motorists only have to pay a fixed amount per gallon.

And as for the 1 percent tax on food and beverages for immediate consumption, such taxes could drive restaurant patrons elsewhere or convince would-be diners to simply eat at home.

While an additional $0.04 per gallon of gas and a 1 percent tax on food and beverages might not sound like a lot, Oswego officeholders should remember that such purchases could have a significant impact on various industries and consumers. And the taxes may not meet funding expectations, which could result in future taxes.