At least one-fourth of an upcoming sales tax increase in a fast-growing Birmingham suburb will pay the city’s bond debt for major capital projects, officials have agreed.

Helena council members Monday evening amended a proposed tax increase ordinance to mandate that 25 percent of the new penny increase directly pays for debt.

Council members will soon vote on the proposal to raise sales taxes by one cent, making the total sales tax rate 10 cents on the dollar.

The move is expected to generate about $2 million more annually for the growing city to pay for major capital projects including the new city hall and sports complex.

“From the beginning, I felt strongly that these funds should be earmarked specifically for bond payments and dedicated capital projects, not simply absorbed into the general fund,” Councilwoman Andy Healy told AL.com.

The city currently charges a 4% sales tax, adding to the state 4% and Shelby County’s 1%. The city budget estimated its sales tax collection to be about $5.6 million for FY 2024.

Most council members have said the action is needed to ensure Helena is able to pay for debt associated with major projects as well as other obligations.

Healy early on pressed the council to earmark the new money to pay debt rather than putting it into the general fund.

“I believe the only way the public will support this new tax is if they can clearly see where the money is going and how it’s being used to meet our obligations,” he said. “By tying the revenue directly to bond payments and budgeted capital improvements, we’re honoring that trust.”

The tax increase comes as Helena city finances come under scrutiny. An audit showed Helena ended the last fiscal year with an $11 million deficit largely due to construction of a $45 million project to build a new city hall and sports complex.

The audit conducted by Birmingham-based accounting firm Dent Moses also showed that city spending in all categories last fiscal year exceeded budgeted amounts.

Councilman Hewy Woodman is the only official to express skepticism over the sales tax increase. Woodman previously said he needed more evidence to support raising taxes. He was silent during discussion Monday and instead shook his head during some moments.

Council members noted that Helena has the lowest sales tax among all of its neighboring cities including Pelham, Alabaster, Bessemer and Hoover. Still, the city’s growth and needs require a funding source, said Councilman Chris Willis.

“Everyone hates raising taxes,” he said Monday evening. “It should have been raised years ago, so here we go.”

Helena has a population of more than 22,000 people. The city has added more than 5,000 new residents since 2010, according to estimates from the U.S. Census Bureau.

The public will have a chance to comment on the sales tax proposal during the July 14th council meeting. The increase would begin 30 days after the council approves the ordinance.