BLOOMINGTON - Taking out the trash and buying a six-pack of beer in Bloomington already costs more than it did two weeks ago.

Soon, washing dishes and taking showers may too, as could new clothes and concerts at the U.S. Cellular Coliseum. All in an effort to stave off a $3 million budget shortfall.

For years, a strong economy generated the tax money the city needed to add services and programs with little need for those types of fee hikes. Now a slowing economy, pension and Coliseum expenses, and a drop in tax revenues has changed that, leaving city officials scrambling to pay the $75 million general fund tab that kicks in May 1.

In addition to several expected tax and fee hikes, they've also agreed to carve $1.5 million from the city budget and plan to shave $1 million more.

That combination will eventually solve the current problem, but may also be a harbinger of things to come. Mayor Steve Stockton already has warned that more fee hikes are likely.

"It has been the policy of past councils to put additional strain onto the general fund and not raise rates," Stockton said. "No doubt we will need to talk about this."

Debate expected to continue

In recent months, the shortfall and how to solve it has generated considerable debate among city officials and the larger community.

Unexpected costs for the police and fire pensions, the Coliseum and flat-lined sales tax revenue are blamed for the budget shortfall this year. That has sparked a debate on cutting services and raising fees, but also on how the city has spent its money. Many aldermen say they are concerned with the large expenses such as the emergency dispatch center, the Bloomington Center for the Performing Arts and the Coliseum that have added staff, but smaller perks and costs have raised eyebrows, too.

The $1.5 million in cuts approved by the council include travel, staff awards dinner, postage and savings in insurance premiums.

Last month, council members agreed in principle to hike the city sales tax from 7.5 percent to 7.75 percent to generate roughly $2.5 million in annual revenue. Most of that money, $1.9 million annually, will be earmarked to pay the construction bonds used to build the Coliseum.

In addition, council members approved a hike in the city's package liquor tax from 2 to 4 percent, generating an additional $300,000 a year. They also raised the monthly garbage fee from $5 to $7 per household, adding $600,000 to the city's coffers.

Aldermen won't receive specifics from City Manager Tom Hamilton on the additional $1 million in needed cuts until March. Talk includes cutting seasonal staff, computer equipment maintenance and park programs.

Programs studied

The council also is expected to discuss other areas where it could save money over the long term, including garbage. Nearly $6 million annually is spent for trash collection, bulk waste pickup and curbside recycling.

Right now, 18 people work on six, three-person crews to collect garbage, but other cities use one-person trucks.

"We should be looking at the latest techniques and equipment so we can plan for the best, most efficient system for the city," said Ward 4 Alderman Judy Stearns.

But Michael Jefferson, a regional representative for American Federation of State, County and Municipal Employees Local 699, said one-person trucks may not result in the savings some think.

"One person can't cover that much ground as quickly as a three-person truck," said Jefferson.

In addition, the up-front cost of buying new trucks can be a major expense, Jefferson added, noting the $260,000 trucks are nearly twice as costly as current city vehicles.

Employee cuts?

More study also is needed on an early retirement program for senior employees that some think should be considered.

Ward 3 Alderman Kevin Huette and Ward 9 Alderman Jim Fruin are skeptical any program would save the city money - especially if an employee would have to be replaced, as in the case of department administrators.

Hamilton does not have estimates on how much might be saved. In the meantime, the city has a hiring freeze in the wake of the budget debate and nine positions remain unfilled.

But the loss of employees does not sit well with Ward 6 Alderman Karen Schmidt, who said fewer employees will eventually hurt city services.

"If there were people lollygagging around, I'd be asking a lot more questions about our staffing levels," Schmidt said.

The Coliseum problem

But the U.S. Cellular Coliseum remains the elephant in the room.

The city must find a way to pay down the downtown facility's $29.5 million bond debt because, despite a projected operating profit of more than $700,000 for the fiscal year ending April 30, the number of events has not generated enough revenue to do so since it opened nearly two years ago.

In its first year, the Coliseum cost the city an unexpected $2.5 million; this year's costs are pegged at $1.6 million. In October, an audit of the Coliseum's financial records concluded the bonds should be accounted separately from operations and the Coliseum's management has repeatedly maintained its 10-year contract with the city does not require it to pay for the bonds.

As to the current shortfall, an additional ticket fee will be studied. But the mayor estimated a $1 tax would generate only about $400,000 annually, or about 20 percent of the bond payment.

That reality, and the need to rebuild reserves, now means a sales tax hike is likely this summer. A majority of council members support the raise - the first in eight years. A final vote could come at tonight's council meeting.

The reserve fund, which helps cover bills and emergencies, is about $4.6 million - about $3 million short of what financial experts recommend. The council will consider raising the reserve minimum to 15 percent of its budget at its meeting Monday.

But Huette said the city shouldn't be given "a new pot of gold" to solve its problems.

"I have been vehemently opposed to the sales tax (increase) because once that money comes in, that tax will never be reduced," he said.

But there is a grudging agreement that something must be done, and few other options would raise the necessary amount of revenue.

More costs to come

But even more sales tax revenue won't solve all the city's budget woes.

The mayor warned that long-term plans for a $25 million-plus regional water project and a $3 million deficit in the city's sewer fund may mean more fee hikes before too long.

After droughts in the 1980s, city officials decided they needed another water source in addition to Lake Bloomington and Evergreen Lake. A proposal would use the Mahomet Aquifer as the source, but no funding has been set aside to finance the project.

Water Department Director Craig Cummings said a plan presented last year would hike water rates 7 percent, about $3 per month, for several years to begin saving for the project. But costs have already increased since then.

The city also is studying how to solve a $3 million sewer fund deficit. The minimum rate, less than $3 per month, hasn't been raised since 1996. City officials aren't sure how much of a hike would be needed to cover the shortfall.

Sewer rates haven't been increased in more than a decade. For now, the general fund is covering the deficit. The minimum rate of $2.72 per month hasn't been raised since May 1996. At this time, there are no estimates on how much rates could be increased.

"This council will have to decide: Do we address this or do we let someone else deal with the sewer fund?" Stockton said.

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Taxes and fees

The city of Bloomington will likely use a combination of $2.5 million in budget cuts, $600,000 in annual fee hikes and $3 million in tax increases to cover a $3 million gap in its general fund and annual payments toward the $29.5 million in bonds for the U.S. Cellular Coliseum.

Approved:

- $1.5 million in cuts to areas including seasonal personnel, Miller Park Zoo hours, insurance premiums, and travel and training budgets.

- $2 monthly bump to garbage fees, from $5 to $7, expected to generate an extra $600,000.

- 2 percent increase in the city's package liquor tax will likely generate $300,000.

Pending:

- $1 million more in cuts expected to come before the City Council in March.

- A sales tax increase from 7.5 percent to 7.75 percent likely will be voted on today. Passage would generate about $2.5 million in new annual revenue.

- Raises to water and sewer rates will be studied. Money is needed to fund the creation of a second water supply for the city and pay for a $3 million deficit in the sewer fund.

- A possible ticket fee at the Coliseum also will be studied.