Cottage Grove council adopts 2025–26 budget; asks staff to propose cuts to close a 16% gap

The Cottage Grove City Council adopted the 2025–26 budget Monday night after extended discussion about audits, staffing and long-term funding, voting — with one member dissenting — to approve the plan required by state law.

The vote followed a public hearing and a separate supplemental budget approval that recognized a $3,000,000 grant for Cleveland Street infrastructure improvements. Council also accepted staff assurances that auditors have begun work on prior-year audits and directed the city manager to return in July with proposals to reduce a projected 16% gap in the multi‑year budget by at least one‑third in the first year.

City Manager Sauerwein told the council the budget committee asked staff to bring back options to narrow a projected gap between revenues and expenditures. "Committee recommended that the city council direct the city manager to bring the first council meeting of the 2025/2026 fiscal year an agenda item to discuss how to reduce the 16% gap in the budget between the expenditures and revenue over the next 3 years with the first year seeing the gap reduction of at least 1/3," he read aloud.

Councilor Lammerman said she was "extremely discouraged by the budget committee process" and raised concerns about the pace of the audit and lack of detailed line‑item review before approval. Lammerman cast the lone "no" vote on the final budget motion, saying she did not feel the council had adequate accountability information.

Other council members said they supported approval to meet the statutory deadline and to avoid leaving the city without a legally adopted budget. Councilor Settlemeier, a newer member, said the council had committed to continued oversight and expected staff to return with ideas for closing the revenue/expenditure gap.

Sauerwein and Finance staff said an outside audit firm has started work on the city's backlog of audits (beginning with fiscal 2022–23) and that staff will bring proposals and quarterly budget updates beginning with the first council meeting in July. "The auditors spent all last week here on-site," Sauerwein said, adding the city aims to complete the outstanding audits by the end of the next fiscal year.

The council also approved a supplemental budget to recognize and appropriate the $3,000,000 Cleveland Street grant and to reflect a transfer of one employee from community services to the city manager's department and contingency adjustments in utility funds.

What the council approved

- Resolution 2170: Adopt the 2025–26 budget, make appropriations and impose/categorize ad valorem taxes (motion carried; Lammerman voted no). - Resolution 2167: Adopt the supplemental budget for FY 2024–25 to recognize a $3,000,000 grant for Cleveland Street and other housekeeping items (adopted unanimously).

Next steps

Council directed staff to present a plan at the council’s first July meeting showing how to reduce the 16% budget gap by at least one‑third in the first year, and to provide quarterly updates thereafter. City staff said they have already begun internal work on cost‑reduction and revenue options and will return with specific proposals.

The council’s action meets the state law deadline to adopt a budget by June 30 and leaves the city with a plan to pursue additional transparency, auditing and options to close the budget gap.