Municipal officials and residents learned that the town budget has a deficit of more than $1 million.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
GREENVILLE, Pa. -- Borough council, urged on by a crowd of more than 200 residents, voted Thursday to ask the state to declare Greenville a financially distressed community.
It was only a straw poll taken during a council work session and it will have to be backed up by a formal resolution at Tuesday's regular meeting, but all seven members of council support it.
The vote came after the auditing firm of Black, Bashor and Porsch of Sharon told the gathering that the borough's general fund is running a $1 million deficit.
That's equal to one-third of the annual general fund budget.
The announcement by Frank Nagy of Black, Bashor and Porsch was met by a collective groan.
Officials said they learned the borough was in financial trouble shortly after the resignation of former borough manager Peter Nicoloff.
Here are figures: An audit by Black, Bashor and Porsch of the 2000 budget showed that $500,000 had been taken from a $3.5 million bond issue borrowed for recreation and other improvement projects and used to meet general municipal operating expenses.
The borough actually ended that year $614,000 in the red, Nagy said, adding that a preliminary review of an audit for 2001 shows there was an additional deficit of $448,000 for that year, bringing the total deficit to $1,062,000.
During 2001, the borough used another $171,000 of the bond funds for general operating expenses, borrowed an additional $39,000 from the nonresident wage tax account and $52,000 more from the sewer fund capital reserve account, Nagy said.
The borough has tapped those two accounts before as well and now owes the wage tax account a total of $325,000 and the sewer capital fund $83,000.
Further, a $270,000 tax anticipation loan borrowed at the beginning of 2001 wasn't fully paid back at the end of the year and the borough still owes $245,000 on that debt plus $13,000 in interest, he said.
When questioned by the audience, he said the borrowing from the various other municipal accounts was done by the former borough manager.
All of those debts are part of the $1,069,000 deficit, Nagy said, adding that all of them must be paid back.
On the positive side, the streetlighting account owes the general fund $41,000, and the sewer operating fund owes it $199,000, he said.
What went wrong: Some in the crowd asked if there was any money missing or if any illegal activity had occurred.
Nagy said all funds were accounted for and Atty. Warren Keck, borough solicitor, said that although those budgetary borrowings were unauthorized expenditures, they weren't illegal. It may have been mismanagement but it wasn't criminal, he said.
Council has opted to turn to the state for help under Act 47, the Distressed Communities Act.
Under that program, the state will study municipal finances and come up with recommendations on how Greenville can restore its financial health, said Michael Foreman of the Center for Local Government Services which administers the program.
Meanwhile, council is still trying to finalize a budget for 2002 and will go to Mercer County Common Pleas Court at 1:30 p.m. Thursday to seek permission to raise property taxes by 24 percent, or 6.17 mills, for this year.