BLOOMINGTON -- The City Council wants to stop the bleeding in Bloomington's budget by cutting programs, but it still may increase property taxes.

In a related matter, the council learned at its meeting Monday that its financial woes are going to cost the city more when it borrows money because its bond rating has dropped.

The council approved an estimated levy of $23,586,675, which covers the state required increases in the city's pension contributions. That amount is $2 million less than what was recommended by City Manager David Hales.

With the lower estimated levy, the owner of a $150,000 house would pay an extra $30.86 in property taxes.

The estimated levy requires a truth-in-taxation hearing before the council can vote on it. The hearing will be held Dec. 14.

Mayor Steve Stockton warned aldermen that if they were not willing to raise taxes to balance the city's $77 million general fund, they will need to be willing to vote on cuts.

"You know as well as I do when we talk about cutting services we get a rash of letters and calls for support to keep the program," Stockton said.

The city has about $8.4 million in needs for its next fiscal year that cannot be paid for by projected income and the city is already $4 million in the red.

The deficit has been noticed by bond rating agencies, said Finance Director Tim Erwin. The city has gone from a "Double A" rating with a stable outlook, to a "Double A" rating with a negative outlook.

The bond rating determines what kind of interest rates the city will pay when it borrows money.

"If we don't take steps to reduce our deficit, it (the rating) will go down further," Erwin said.

The council unanimously approved refinancing two of its bonds in an attempt to give the city some cash for emergencies. The city will put $2.78 million in an account instead of making the bond in payments in December.

In an unrelated financial matter, the council approved a project list for the $1.9 million in downtown redevelopment funds.

Among the projects that will get funded is replacement of water mains and streetscapes with a focus on the 300, 400 and 500 blocks of Main Street and the 100 block of East Street to the 300 block of West Front Street.

The spending plan also calls for $100,000 to pay for façade grants while the attempt to purchase two Verizon parking lots are on hold because of the timing.