Cottage Grove is facing a tough budget year after falling behind on audits, and discovering serious accounting errors.
The city is close to two years behind on audits. It just finished its 2022-2023 audit and hopes to be caught up by next year, said City Manager Mike Sauerwein.
Sauerwein said Cottage Grove has had high staff turnover in the past few years, especially in its finance department, and it hired outside accountants to help. They discovered several errors, leaving the city in a worse financial position than leaders realized, and facing budget cuts.
“I don’t want to sugar coat it,” Sauerwein said. “There are going to be some really hard decisions for the budget committee and city council to make.”
Sauerwein said the city’s interim finance director has been working on adding additional checks and balances to ensure future numbers are accurate. He said this year, the city will also start developing its budget a month early, and hold a town hall on the issue.
Sauerwein said the city’s starting fund balance of its general fund, which is the more flexible part of the budget that pays for most public facing services like police and the library, was about $1.6 million less than city leaders anticipated. He said Cottage Grove leaders do not yet know how much they will have to cut or what programs will face reductions.
"We will definitely have to reduce spending by a significant amount,” Sauerwein said. “We're still working through and crunching the numbers to figure out what our starting fund balance is going to be on July 1."
Other local governments also behind
According to the Oregon Secretary of State’s Office, Cottage Grove is among 114 governments still behind on audits.
Others that haven’t submitted an audit for 2024 include Albany, Waldport, Depoe Bay, Drain and Sweet Home, as well as numerous school, water and fire districts across the state. The cities of Florence and Oakridge also haven’t completed audits for 2024, but received extensions approved by the Secretary of State’s Office.
Many cities across Oregon that have completed audits, including Lane County and Eugene, have also consistently faced budget issues. Both governments made budget cuts last year as they faced plateauing property tax revenues and increasing expenses.
Oregon Secretary of State spokesperson Tess Seger said the state has little enforcement authority to ensure local governments complete their audits in a timely manner, but governments that are delinquent are jeopardizing their ability to service debt, comply with grant requirements and win new grants.
