BLOOMINGTON - It will cost a little more to buy groceries, clothes and cars in Bloomington come July 1. The City Council approved a hike in the sales tax, bringing the rate from 7.5 percent to 7.75 percent to generate the money to cover the cost of building U.S. Cellular Coliseum. | VIDEO: Council votes for sales tax hike | Taxpayers taken for a ride? | Other expected increases

The increase will add 25 cents on the purchase of $100 in goods.

Six aldermen voted in favor of the measure, which included stipulations that all of the money generated by the increase go toward paying off the $29.5 million in Coliseum bonds and that the increase end in 2015. Aldermen Jim Fruin, Ward 9; Judy Stearns, Ward 4; and David Sage, Ward 2; voted against the increase.

Despite his vote, Fruin said he was supportive of raising the sales tax.

Fruin said he did not see the point to the stipulations suggested by Ward 7 Alderman Steven Purcell because the council can revisit the sales tax every year and Fruin added he did not want to tie the hands of future councils, which may need the money for emergencies. Fruin suggested the council agree that the priorities for the money should be the Coliseum bonds, rebuilding the city's cash reserves and adding to its road improvement budget.

"I would have drawn it (the motion) differently but I am supportive of the sales tax," Fruin said.

Those who voted for the increase were Purcell, Allen Gibson, Ward 1; Kevin Huette, Ward 3; Jim Finnegan, Ward 5; Karen Schmidt, Ward 6; and John Hanson, Ward 8.

The city is facing a $3 million shortfall in its $75 million general fund. The council has already approved $1.5 million in cuts and another $1 million will be presented in March with the budget. While cuts and some fee increases already will cover the deficit for the fiscal year that begins May 1, other issues, such as paying off the Coliseum bonds and rebuilding the reserves, have added to the council's budget dilemma.

The sales tax hike will generate about $2.5 million in new money for the city. That will go toward paying the roughly $1.9 million annual bond payment. The remaining money will be added to a reserve account until 2014 when the city can start making additional payments on the Coliseum bonds.

Purcell said general fund money that now goes to the Coliseum bonds can be used to rebuild the city's cash reserves.

Meanwhile Stearns and Sage said they wanted to see more work and effort done to trim the city's budget before the sales tax hike was made.

Discussion over the sales tax grew heated between Stearns, Schmidt and Hanson. Stearns said she wanted to see the $1 million in cuts and wanted to see more work done to determine whether changes in the garbage collection and cars going home with employees would save the city money.

Hanson argued the $1 million will come from suggestions already made by the council to staff. He added the council will study the garbage and the cars but most aldermen agree that work cannot be done in time for this budget. The council must approve the city's budget in April.

"You present this like it is an either/or situation and it's not," Schmidt said. "We have agreed to look at those things. But we have an obligation right now and we need to address it."

In a related matter, the City Council voted 8 to 1 to set the recommended cash reserve amount to equal 15 percent of its general fund. Stearns voted against the increase. Most local governments set the reserve at 10 percent so they can pay bills while waiting for tax revenue and cover emergencies. Bloomington's reserves are around $4.6 million, about $6.6 million less than the 15 percent level.