BLOOMINGTON -- A bond plan that will put $5.4 million into the city's general fund over the next two years was given tentative approval by the Bloomington City Council.

City Manager David Hales said he would like to refinance two bonds that are in their final two years of payments.

Bonds issued in 1996 and 2001 will be paid off in two years if the city makes it final payments of $2.9 million and $2.5 million. However, Hales said the city can relieve its cash flow problem by refinancing those bonds.

The city started its current fiscal year May 1 about $5 million in the red. The council learned earlier in that night that recouping $1.1 million overpaid into a tax increment financing fund has cut that to about $4 million.

Hales added that the city's $77 million general fund budget, which covers most operating expenses, will have to be cut by about $2 million to stay balanced.

Refinancing to extend the bonds will cost the city an extra $4.6 million over 20 years.

Ward 3 Alderman Kevin Huette said he would prefer the city make the effort to make the payments.

Hales said that may not be the best option for the city because bond rating agencies will see the city is having cash-flow problems and likely downgrade the city's bond rating. That would leave the city's $14 million in variable rate bonds vulnerable to higher interest rates.

County's land development plan

In unrelated business the council debated whether it should adopt McLean County's proposed comprehensive land development plan.

The plan hit a snag for several aldermen because it included the controversial Main Street Corridor Plan. Part of the Main Street plan is a proposal for form-based building codes, which some business owners have said are unduly burdensome.

Also, the council reluctantly made a $21,000 payment to Rowe Construction on its $750,000 resurfacing contract. Rowe is behind in its work, said Public Works Director Jim Karch. He estimated that Rowe has completed about 25 percent of the city's resurfacing contract but Rowe may be stalled for the season because of the change in the weather.

The contract with Rowe expires Thursday.

In a discussion item, Hales announced to the council that he and the city's department heads would not be receiving a cost-of-living pay increase this year to help with the city's cost-cutting measures.

Hales did not say how much that would save.

A report that includes the cost savings along with $2 million in budget cuts will be brought to the council in two weeks, he said.