Some council members and residents said Tuesday they believed consecutive 10-mill tax hikes in 2000 and 2001 -- equivalent to a combined 6.67 mills under the new countywide taxing system -- would be erased after two years.

Not so.

While tax increases for the bond issue were to stop after two years, the added mills were not scheduled to go away for 25 years.

The combined 6.67 mills, taxed for a quarter-century, would pay off the bond.

The bond -- previously reported as a $3.5-million issue, but actually was for $3.67 million -- was floated by the borough to support a multi-million recreation and revitalization project.

The bond was specifically floated to "refund the borough's (1999) general obligation notes, construct a regional recreational facility and trail system, construct a new fire station, complete streetscape enhancements on Main Street and pay the cost of issuing the bond," according to the official bond agreement. It cost the borough nearly $130,000 to float the bond, the agreement said.

About $500,000 of the bond issue was transferred to the general fund and used for day-to-day expenses in 2000, according to the most recent audit. A 2001 audit, expected to be released next month, will show whether more of the bond was used for general purposes in 2001.

Solicitor Warren Keck III said the borough was not authorized to use the bond money for day-to-day expenses and therefore the money must be replaced.

Council Vice President Bryan Langietti, chairman of the budget committee, said Tuesday the need to replenish the bond will not derail an effort to balance the current-year budget.

The two matters will be tackled separately, he said.

Langietti said the budget passed on New Year's Eve, which called for a 4.6-percent tax increase, is between $90,000 and $100,000 in the red. Council reopened the $3 million-plus plan on Jan. 7 and said it would make cuts needed to balance it by Feb. 15.

Langietti said his committee hopes to present its reworked budget to council in early February.

Langietti and Borough Manager Kenneth S. Weaver said they also plan to rework the budget and budgeting process this year.

Both said the borough should have a contingency fund. Weaver said municipalities should have a contingency fund equaling at least 10 percent of the overall budget -- in Greenville's case, at least $300,000 -- that would be used only to cover unexpected costs or perhaps serve as a local match for grants.

"That's just good basic management," Weaver said. Weaver also hopes to reduce the number of line items in the budget so spending is easier to track.