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City finance staff outline plan to shift mill levy to recreation fund to free sales tax for capital projects
Summary
Finance staff presented a five-year CIP revenue strategy that would shift mill-levy support from debt service to the Recreation Fund as bonds retire, freeing sales-tax dollars for capital projects if the commission approves the plan and issues no new debt.
Leavenworth City finance staff presented an overview of the capital improvement program (CIP) revenue picture and a proposal to shift mill-levy support from the debt service fund into the Recreation Fund over the next decade, freeing sales-tax revenue for CIP projects.
The presentation, led by finance staff Roberta (Finance Director) and reviewed during the city commission study session, showed that 25% of city sales tax currently goes into the CIP sales tax fund and that a portion of sales tax is transferred to the Recreation Fund and debt service. Roberta said that, under current assumptions, decreasing debt-service obligations as existing bonds retire would allow the city to increase ad valorem (property) tax support for recreation and reduce the Recreation Fund’s dependence on sales tax, making roughly $4.2 million of additional sales-tax revenue available for CIP projects over five years if no new debt is issued.
Finance staff emphasized three constraints: (1) existing debt-service payments are fixed until the last bond retires, (2) TIF transfers are contractual and not reducible by the city, and (3) any shift depends on assessed-value growth and policy decisions about how to allocate mill levies. Roberta said outstanding governmental debt at the end of 2025 is about $18.6 million and that debt service in 2025 is roughly $3.8 million. The presentation showed an example where the Recreation Fund would receive about $1.7 million in sales tax in 2026 and that shifting mill-levy support could reduce that sales-tax need over time; Roberta presented a proposed 0.834-mill increase to the Recreation Fund levy in 2026 (raising it from about 1.6 mills to 2.5 mills under the plan) as the mechanism to accomplish the shift.
Commissioners and staff noted the plan’s principal assumptions: assessed values increase (the presentation used a 3–4% assumed growth scenario), no new debt issuance for pavement management, and that debt will be paid off by 2036 under the current schedule. Staff cautioned the CIP shown is preliminary and will change as decisions (for example on solid-waste funding and other priorities) are finalized during the budget process.
Roberta and the city manager framed the proposal as a budgeting approach rather than a final decision; commissioners were invited to review the full CIP book, ask questions, and revisit allocation choices during the all-day budget session and future meetings.
The city did not take any formal votes at the study session; staff said final policy choices (mill-levy shifts, debt issuance, or reallocation of sales tax) would return to the commission for decision during the budget process.
