There’s been some discussion lately about the village’s debt, and I want to be transparent by providing clear context on the issue. Municipal debt, when used responsibly, can be a valuable tool for investing in the infrastructure and services that are necessary for the long-term growth of our community. Unlike personal debt, municipal debt is typically used to fund projects that will benefit the community for many years, such as village buildings, roads, and public safety facilities. By taking on debt, we can spread out the costs of these essential projects over time, ensuring that future generations share in the benefits while maintaining the services we need today. Moreover, this approach allows us to fund projects immediately, without waiting to accumulate taxpayer funds, and to complete them before construction costs rise as the cheapest time to build is right now. As long as the debt is carefully managed, with a focus on growth and investment, it can stimulate the local economy, create jobs, and support local businesses, all while keeping taxes fair and manageable. In this way, municipal debt is a smart tool for building a stronger, more vibrant community.
Under Wisconsin state law, a municipality’s debt limit is set at 5% of the value of its taxable property. Between the police station, the potential library, and other projects, the village’s debt, on the high end, may reach 78% of that limit in the first year of these projects, but is projected to drop to 69%, 60%, 53%, and then 46% in the subsequent years1. These percentages might also be lower in the future with additional home developments and as property values evolve. I do want to stress that during the January 13th village board meeting, you can hear Cameron Sawyer, the village’s finance director, and Ehlers, the village’s financial adviser, state that there isn’t a fixed target for our debt limit. Additionally, they also stated that as long as the village does not utilize a large percent of the debt limit for an extended period of time and there is a plan to bring down the debt percentage, it should not impact the village’s bond ratings. Lastly, the projected debt capacity should not impact future safety projects such as intersection changes and a new fire truck as those projects are slated to happen in the next 2-5 years when the village is on the lower end of debt limit.
Some individuals have also compared the villages debt levels to our neighbors, the town of Cottage Grove. Unfortunately, that is not a fair comparison as the service offerings for a town and village are vastly different. For example, a village can have a comprehensive public works division, water and sewer service (vs individual well and septic system in towns), a municipal court, crossing guards, and a parks and recreation department. These services can have a significant cost to operate and a municipality must balance these needs with the yearly tax impact for residents.
Ultimately, responsible management of municipal debt is essential for financing critical projects that secure our community’s future. As a candidate for village trustee, I will strive to keep the village in an optimal financial position and I remain committed to transparency and open dialogue as we work together to build a stronger, more vibrant Cottage Grove.
- From Ehlers financial management plan presentation during the 1/13/2025 village board meeting. ↩︎
JP for Cottage Grove 