Grove City's auditors said the borough is facing a general fund balance shortfall for the first time in recent memory.

A preliminary report on the 2001 audit of borough finances shows an operating deficit of $185,797 from Jan. 1, 2001, to Dec. 31, Joe Paparone and Bill McKnight of McGill, Power, Bell and Associates, told borough council Monday.

However, borough officials weren't too concerned.

"We can't read this as being a problem," said Mayor Bruce Bennett.

Over the past few years, taxes have decreased and water, sewer and electric rates haven't been raised, Bennett said.

If anything, that can be seen as a benefit to the borough, Paparone said.

"You're not strapped, or limited by your options, unlike some of the surrounding communities," Paparone said. "The good news is you're in a fiscal position to move some things around."

Solutions to fix the problem vary. Among them are transferring money from the electric fund, cutting from other areas or increasing taxes.

Solicitor Tim Bonner noted that the borough's debt is minimal and taxes are well below where they could be. Grove City's millage is at 4 mills. Under state law, borough taxes are capped at 30 mills.

Bennett added that past councils have been unwilling to raise taxes.

Paparone said that public safety expenditures -- namely the police department -- continue to increase at higher rates than other expenditures. In the past four years, police expenditures have increased from $469,852 in 1998 to $615,175 in 2001. That makes up nearly 26 percent of the total budget of $2,388,360.

"Other municipalities are facing the same struggles with overtime, the number of officers on patrol, etc.," Paparone said. "Historically, this means expenses will have to be revised."

McGill, Power, Bell and Associate's audit will be made official at the April 15 council meeting.