The city council’s goal is to use the financial management plan, as we did for the 2024 budget and for future budgets with the intent to prevent any major tax impact swings from year to year”

Mayor Myron Bailey

A new weather warning siren is also set to be installed on the 9500 block of Military Road, signaling a focus on continuing to improve safety for residents, in this case in support of the new Glacial Valley Park development.

The city’s tax capacity has grown 19.3% over the past year to $69.3 million, 5% of which is due to new construction.

The Cottage Grove City Council adopted a 2024 preliminary tax levy proposal at the Sept. 6 regular meeting. In a step toward creating the city’s total 2024 budget by the end of the year, the tax levy shows an increase of approximately 11.9% from 2023, rising from $20,649,710 to $23,125,600. The adoption of the preliminary levy sets the maximum amount that can be approved in the final budget at the end of the year.

The city’s tax capacity has grown 19.3% over the past year to $69.3 million, 5% of which is due to new construction. Residential and commercial property values in Cottage Grove continue to grow, as will city tax revenue. However, the city tax rate (tax levy rate divided by tax capacity) is expected to be set at its lowest marker ever at 32.745%, one of the lowest in Washington County and other cities of comparable size in Minnesota. The owner of a median-priced home in Cottage Grove (currently $359,700), recently experiencing a 9.2% increase in market value, would expect see an additional $71 on their 2024 property tax statement.

City Administrator Jennifer Levitt noted, “Due to a significant increase in the city’s tax base from new construction within the community and appreciation of existing properties, the tax rate for the city will decrease to its lowest in the city’s history.”

The general fund is slated to receive an 8.96% expansion, allowing for more public safety funding, newly-created positions, and local government aid through 2025. Mayor Myron Bailey thanked local legislators for their commitment to Public Safety by securing over $1.7 million in funding for the city of Cottage Grove.

“Those funds will enable us in 2024 to hire an additional police officer, three full-time firefighters, and provide public safety equipment we would have had to wait years to purchase, making an immediate impact in our community,” he said.

Other personnel hires are planned in IT services, Recreation, and Public Works.

City employee compensation and benefits operate through union contracts, which state an agreement of a 3% cost of living adjustment for 2024, which is accounted for in the proposed budget.

Capital expenditures will include vehicle replacement for Public Safety, Public Works, Parks, and the Water Division, primarily new squad cars, mowers, and utility vehicles. In addition, a street sweeper will be replaced in 2024 which will be funded 50% through a grant from the South Washington Watershed District (SWWD).

“We’re grateful for the partnership of SWWD to help fund a new street sweeper, which will have positive environmental impacts to our stormwater system,” said Bailey.

A new weather warning siren is also set to be installed on the 9500 block of Military Road, signaling a focus on continuing to improve safety for residents, in this case in support of the new Glacial Valley Park development.

Capital investment and job creation remain a priority to grow and diversify the city’s tax base. The Economic Development Authority (EDA), whose primary goal is to assist current businesses with retention and expansion efforts, will see a 220% increase in funding in 2024, from $125,000 to $275,000, reflecting expected needs as the city continues to grow. Working to pursue new businesses, the EDA brings jobs and significant capital investments to the community. This will be the first levy increase for the EDA since 2017.

The EDA also focuses on affordable housing, like the current request from Trellis Co. to build a 52-unit senior housing project, hoping to bring a “deeply affordable product” to the community.

In reference to the funding increase for the EDA, Levitt said, “We are anticipating seeing more affordable housing proposals in 2024 because of the metro sales tax for local affordable housing aid. This will be an opportunity to continue to invest in affordable housing in our community.”

Bailey noted that the council is focused on providing a variety of housing options for residents.

“We want to provide housing options for all in the community and at various price points,” he said. “We want people to find a home in Cottage Grove that meets their needs today and what they may need or desire in the future.”

Cottage Grove’s Pavement Management Program, another priority for the city, took a brief pause over the last few years, and the new budget plans to reinvest in it. The 2024 levy contains the levy amount for 2023 pavement management costs as well.

Presented at the meeting by City Finance Director Brenda Malinowski, the preliminary levy and budget proposal was shaped to allow the city to continue to provide the same level of service that is currently provided to the community, factoring in recent and future growth.

“We have been working hard and diligently on our budget since January of this year,” Malinowski told the council. “My thanks to the city council on their dedication in this budget process. It’s never easy, and it takes a lot of time.”

Citing a strong outlook based on current finance management, councilmembers noted their appreciation for Malinowski’s efforts along with city staff to create a workable budget that keeps Cottage Grove on track into the future. Bailey said that stability is the primary goal of the budgeting process and expressed kudos for the work done on the budget thus far.

A 10-year financial management plan was completed by the city earlier this year that guided the 2024 budget. The plan identified the need to invest in operational needs, strategically replace equipment, and fund pavement management and street reconstruction projects. 

“The city council’s goal is to use the financial management plan, as we did for the 2024 budget and for future budgets with the intent to prevent any major tax impact swings from year to year,” Bailey said.

Three public workshops were held in July regarding the preliminary levy and budget plans. According to city staff, feedback from the community has been positive regarding the budget and city services.