Sharon firm Black, Bashor & Porsch will put its financial audit of the Borough of Greenville in layman's terms Thursday at a council meeting, according to Borough Manager Kenneth S. Weaver.

A presentation by a representative for the state Governor's Center for Local Government Services, focusing on the borough's road to fiscal recovery, is to follow the audit report, Weaver added.

Council meets at 6:30 p.m. in the Greenville High School lecture hall.

"We will give a brief oral overview of what the audit has revealed to this point, particularly where the general fund stands," said Frank J. Nagy, one of the auditors who began reviewing the borough's 2001 finances last month.

The borough asked auditors early last month to fast-track the audit and report their findings to council by early February -- before council passed a revised current-year budget. Council plans to vote next Tuesday on a proposed $3.06 million plan calling for a 24-percent hike in property taxes over last year.

Council also wanted a report on the condition of a bond issue that was floated to support a multi-million-dollar recreation and revitalization project but used in 2000 to keep the borough afloat financially.

A 2000 audit of borough finances showed that about $500,000 of the $3.67 million bond issue was used for general purposes. The 2001 audit should show if more bond money was used for day-to-day expenses last year. Borough solicitor Warren Keck III said the transfers were "unauthorized" and all bond money used for general purposes must be replaced.

"The presentation figures to include a report on the bond issue, as it relates to the general fund," Nagy said.

Auditors have not reported to Greenville Borough Council for several years, Nagy said. "Apparently, we used to do it in the past, but in recent years we have not," Nagy said.

According to council President Richard S. Houpt, former Borough Manager Peter D. Nicoloff Jr. told auditors that no presentation was necessary last year. The 2000 audit, which Houpt said council did not have access to until after Nicoloff resigned in October, showed the borough ended the year with a $614,254 deficit. During 2000 alone, spending outpaced revenues by $453,788.

Nicoloff said early last month that the audit was available to council members. Regarding the use of the bond money, Nicoloff said, "Ultimately, council is responsible. They signed off on all that." Nicoloff has been unavailable for comment for about a month.

The state Governor's Center representative figures to focus his presentation on recovery strategies for the borough.

Weaver said the center should be able to provide insight on Act 47 -- the Distressed Communities Act -- primarily, whether the borough qualifies for or should go after an emergency, interest-free loan under the act.

Fred Reddig, local government policy manager for the Governor's Center in Harrisburg, said last month that the decision to become a distressed community often is a last resort but in some cases a necessary one.

Farrell became a financially distressed community in 1987, making it the state's first under the then-new Act 47 legislation. The state loaned Farrell $651,000 after the city fell short of its anticipated revenue for the year by $705,000. That year, Sharon Steel Corp. -- which had paid 41 percent of Farrell's property taxes -- failed to pay $530,000 in taxes and filed for bankruptcy.

The state loaned Farrell another $292,417 in 1992 when Sharon Steel's buyer, the Castle Harlan Group, filed for bankruptcy.

Farrell remains designated as a financially distressed community today, according to City Manager LaVon Saternow. She said the city owes the state less than $50,000 on the loans.

In addition to the loans, Farrell has benefited from the distressed designation because it has given the city access to technical assistance from the state and some grant money not available to other communities. Also, the designation allows the city to levy a nonresident earned income tax, which the city expects to bring in $155,000 this year.

"We have scaled back operations dramatically and had to learn to do more with a lot less," Mrs. Saternow said.