GREENVILLE, PA. Council drops its plan to investigate '01 deficit

The cost of a probe would easily exceed $40,000, with no guarantee of any return.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
GREENVILLE, Pa. -- Council has decided it would be too expensive to pursue its own investigation into the cause of a $1.6 million budget deficit two years ago.
Lawmakers voted this week to drop the matter, said Pete Longiotti, council president.
A Pennsylvania State Police white-collar crime probe showed there may have been poor management of municipal finances but found no indication of any crime.
That doesn't mean investigations into borough finances have ended.
State review
The Pennsylvania Auditor General's Office is still reviewing all state money that passed through the borough in recent years, and the Mercer County district attorney continues his probe into possible wrongdoing.
Longiotti said council had considering hiring an auditing firm to examine the city books to determine if there was any civil action the borough might take, such as going after an insurance bonding company, to recover money.
It found that would be too expensive because there would be no guarantee of any recovery, he said.
Cost breakdown
The Pittsburgh auditing firm contacted about the job wanted $10,000 up front as a retainer and indicated that the first phase of the study alone would cost about $20,000.
The cost would jump between $20,000 and $25,000 more to complete the examination to determine if there would be any way to recover money, he said.
Any legal fees incurred in a lawsuit would be on top of that, Longiotti said.
"We've been kicking it around for almost a year," he said, adding that council finally decided it was just an expense the borough, which runs on a budget of only about $3 million a year, couldn't afford to risk.
An earlier audit of the red ink showed that to cover operating expenses, the borough had been taking money from a $3.5 million bond issue for recreational and other improvements.
The bottom line was a $1.6 million deficit that the borough must pay back to the bond issue.
Borough officials at the time disavowed any knowledge of the financial problems.
Borough Manager Peter Nicoloff, under whose tenure the cash-flow woes developed, resigned in September 2001 shortly before officials discovered the problem.