One CPA said the borough's general operating fund first started showing a deficit in 1996.
By LAURI GALENTINE
MERCER, Pa. -- A visiting judge granted Greenville Borough Council a requested 5-mill tax increase.
Butler County Senior Judge Martin J. O'Brien said borough solicitor Warren Keck III had presented him with & quot;a pretty grim picture for Greenville. & quot;
Council petitioned the courts for the increase earlier this year after discovering a deficit still existed from previous budgets, according to testimony in Mercer County Common Pleas Court on Thursday.
Frank J. Nagy, a certified public accountant with Black, Bashor and Porsch in Sharon, the firm that conducts yearly audits for the borough, said a deficit began showing in Greenville's general operating fund in 1996. It stands at $1.62 million, he said.
Deficit increase: If the borough operates under the 2002 budget approved by the previous board in December 2001, that deficit will increase by about $408,000, borough treasurer Tracey Vale told the court.
With the increase, Vale said the year-end deficit for 2002 will still be $208,000.
Councilwoman Pamela S. Auchter said that five of seven council members are new to the board this year, and one of the first things they did after being sworn in January was to review the budget.
That line-by-line review, she said, caused council to reopen the budget process when, among other things, they discovered a $275,000 tax anticipation loan included as revenue.
Auchter said council knew they would not receive that money because the 2001 tax anticipation loan had not been paid back.
Without the requested increase the borough would have to default on that loan, she said.
Loan from bond issue: Even with the increase, Auchter said, the revised budget does not allow for repayment of the $667,000 the town has borrowed from a bond issue in their Capital Reserve Fund designated for the downtown revitalization and other improvement projects.
Nagy told the judge the borough has also borrowed $325,000 from the nonresident wage tax fund.
A tax ratio change, from 33 percent to 100 percent, approved by Mercer County commissioners late last year, went into affect Jan. 1 this year, Keck told the judge. That change dropped Greenville's millage from 76.5 percent to 25.33 percent, he said.
Under state law, taxing bodies within the county are only allowed to raise taxes by 5 percent in the first year of the ratio change unless the court approves a larger raise.
The budget shows a 1.17 mill increase, just a little under that ceiling, according to Keck. The 5-mill addition granted at the hearing will set Greenville's millage at 31.5, he said.