Local government specialists who combed Greenville's fiscal books and interviewed officials during the last month said Monday they believe the borough should be declared financially distressed and become eligible for emergency state funding.

Past mismanagement and misuse of public money are the roots of fiscal problems facing Greenville, and the town would not be able to overcome its problems alone, according to an 18-page report by the state Governor's Center for Local Government Services.

The Governor's Center runs the Act 47 program for financially distressed communities under the umbrella of the state Department of Community and Economic Development. Borough officials asked the DCED two months ago to determine if the borough is eligible for the program.

The Governor's Center said the borough should be considered for the program because it has had a deficit and spent more money than it has brought in for three years, operated for two years with a deficit of more than 5 percent of its total revenues and defaulted on last year's tax anticipation note.

"Clearly, the borough is and has been experiencing difficult financial problems in recent years," Governor's Center policy specialist Michael Foreman read from the report.

The problems are primarily a result of a lack of proper oversight by borough officials overspending and financial reporting, as well as misuse and mismanagement of borough funds, Foreman said.

"It is our opinion that the Borough of Greenville has exhibited conditions that make it difficult for it to fulfill its responsibilities," Foreman said.

The borough has a general fund deficit of more than $1 million and for two years has misspent close to $1 million of a $3.67 million bond issue that was reserved for a recreation and revitalization project, Foreman noted.

Only $5,000 of the bond remains, borough officials said Monday.

In addition to the bond money that must be replaced, the borough owes its nonresident wage-tax fund at least $325,000 and its sewer authority capital fund $83,000, Foreman said.

"The net result will be a general fund deficit of $2.73 million as of Dec. 31, 2002," the report predicts.

The deficit is nearly 90 percent as large as this year's estimated $3.06 million general fund.

The borough has been unable to turn to a bank for help. Recent loan requests have been turned down by two banks, Foreman said. But even if it had been approved for a loan, the borough would have had limited borrowing power.

The borough had more than $4.2 million in long-term debt coming into this year.

The $3.67 million bond issue makes up close to 90 percent of that debt. When the borough filed paperwork for that bond, it had room under the Local Government Unit Debt Act to borrow just less than $319,000.

The Governor's Center will present its report and minutes from Monday's public hearing in Greenville to the DCED, which has 30 days to decide if the borough is placed in the Act 47 program.

If the borough is eligible, it could receive a large, interest-free loan up front to address its many immediate fiscal concerns. Specialists and local officials would then develop a long-term financial plan for the borough.