Moments after commending Greenville council's budget committee, Mercer County Common Pleas Court President Judge Francis J. Fornelli allowed council to set the borough's earned income tax 1.2 percent above the state's legal limit.

Fornelli's order allows Greenville, an economically distressed community under Pennsylvania's Act 47, to set its earned income tax at 1.7 percent for residents and 1.5 percent for nonresidents for 2004.

It's the second consecutive year those taxes have been increased 0.7 percent for residents and 0.5 percent for nonresidents to help the community continue recovering from a $1.5 million deficit discovered in 2002. The increase is required by the state-mandated fiscal-recovery plan.

"I'd like to commend the budget committee and congratulate them for an excellent job in a pretty difficult situation," Fornelli said during the 30-minute hearing on Monday. "They have been able to reduce expenditures by $182,000, which is significant and does, in fact, certainly aid in the recovery."

Nobody was in the courtroom to issue public opposition to the hike request, which is expected to bring in "somewhere in the neighborhood of $330,000," said Joseph Hohman, the borough's state-appointed Act 47 recovery coordinator from Resource Development Management Inc.

"We're very pleased that he recognized that the borough council, council president, the treasurer and all the department heads have worked very hard to reduce spending where possible," said Borough Manager Vance Oakes. "And I'm glad that he recognized that."

Before recognizing that, however, Fornelli questioned Oakes and Hohman on more than a handful of detailed issues, including line items ranging from as little as $3,500, which is budgeted for Internet service, to as big as $1.06 million, which is what the borough will have to pay back to the state over 10 years for its emergency loan.

Fornelli also inquired about costs for health-insurance reimbursements, state and local grants, real property tax figures and unemployment payments before agreeing to the hike.

"You might think I'm being particular," Fornelli said, emphasizing by doing so he was trying to save the borough money from having another expert come in and look at the books.

"The dynamics this year are not the same as the dynamics last year, so I spent a long weekend as somewhat of an amateur going over the budget," he added, noting that the close-up look brought about the highly detailed questioning.

Oakes said he anticipated that Fornelli would ask highly specific questions on many of the budget items.

"He had asked for our 2004 proposed budget, our 2003 projected year-ending numbers and he had asked for copies of the audit report, so I knew that he had time to study that," Oakes said. "And we were prepared."

Oakes said council expects to be back before Fornelli through 2006 requesting the income tax increase, although he noted "it will be on a reduced schedule. The rates will be coming down."

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