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Leavenworth staff propose shifting mill levy to free sales tax for capital projects
Summary
City staff presented a five-year capital improvements plan that would shift mill-levy support from debt service to the recreation fund as outstanding debt is paid off, freeing an estimated $4.2 million in sales tax for CIP projects over five years if no new debt is issued.
Leavenworth City staff on Wednesday laid out a proposed five-year capital improvements program (CIP) and a revenue plan that would shift property tax support from the city’s debt service fund to the recreation fund as bonds are retired, freeing sales-tax dollars for capital projects.
Finance staff told the commission the proposal hinges on two assumptions: the city issues no new general-obligation debt and assessed property values rise modestly. Roberta (Finance Director) said the plan would allow the recreation fund to become largely supported by ad valorem tax (property tax) as debt payments decline, which would reduce the portion of sales tax now used to support recreation and thereby increase funds available for CIP work.
Roberta said 30% of sales tax transferred to the recreation fund in 2025, 17% to debt service and 53% remained available for CIP projects. “If we issue no new debt and the mill levy that supports the debt service is shifted to the recreation fund as debt is paid off, the last bond payment will be made in 2036,” Roberta said, adding that under those assumptions an additional $4.2 million of sales tax would be available for CIP projects over five years.
Why it matters: Sales tax currently funds much of Leavenworth’s CIP; a large share of collected sales tax is transferred to debt service and recreation. Staff said the proposed shift would preserve services supported by the recreation fund while freeing sales-tax revenue for one-time capital work. The plan assumes a 2026 one-time mill-levy reallocation (a proposed increase of about 0.31 mills to the recreation fund in staff materials) and 3% annual growth in assessed value going forward.
Supporting details: Roberta reviewed current funding sources by fund: CIP projects mainly from a dedicated CIP sales-tax allocation, streets projects from sales tax plus about $500,000 annually in federal fund exchange reimbursements, and sewer/refuse projects funded by user fees. She noted three CIP projects now funded by debt service (Thornton Street, the Business and Technology Park, and the Bridal/Bridle Ladder project) whose debt service obligations reduce the share of sales tax available for new projects. The finance presentation estimated governmental fund outstanding debt at about $18.6 million at the end of 2025 and $3.8 million in 2025 debt service costs.
Cautions and next steps: Staff emphasized that assumptions (assessed value growth, no new debt issuance) drive the outcome, and said final CIP numbers will change as detailed solid-waste cost estimates and other inputs arrive. The commission did not take formal action; staff asked commissioners to review the CIP book and said more detailed budget discussions would follow in the coming months.
For now, the plan provides a framework to shift the city’s tax mix so debt service requirements fall and property taxes cover a larger share of recreation operations while freeing sales-tax resources for capital work.
