The mushrooms pictured are not responsible for plant decline or infection, as they are only decaying already-dead organic matter in the soil itself, recycling those nutrients for plant roots to use. They will disappear on their own fairly soon, and there is no fungicide treatment that would affect the fungus that is producing them. However, their presence might suggest that the area is too frequently damp for the preferences of Russian Sage.

Russian Sage requires excellent soil drainage and a full sun (6-8 or more hours of direct light in summer) to thrive. It can struggle, lose leaves, or die back if the roots stay too wet. While it can also be damaged by under-watering, it is inherently more drought-tolerant than wet-tolerant.

When you check it for water, feel the soil about four or five inches deep, and water only once it has become somewhat dry to the touch at that depth. If damp when you check, the plant should be fine without watering.

Any stems that may have become leafless due to stress and shed leaves can probably be cut back, though you can also wait to see if new leaves appear further towards the stem base. If the plant isn't growing in full sun, consider transplanting it to a sunnier location, which will speed-up recovery and, when the plant is a bit older, support good flowering.

Miri