MEXICO – Selectmen decided Wednesday to buy just one police cruiser as they continue to search for ways to reduce municipal spending.

The board is attempting to come up with at least $330,000 to deal with a projected deficit of between $131,000 and $500,000 that was uncovered in a recent audit.

The audit found that the town has no carryover funds, and in addition to the estimated debt of $131,000, the town has borrowed $197,000 from its reserve accounts, and $200,000 from a tax anticipation note to provide cash flow.

The town’s reserve funds are accounts set up to save money each year for fire, highway and police equipment, road work, and other projects.

Treasurer Penny Duguay said the town had $225,000 set aside in reserve accounts. And although the borrowed money is now being paid back because property taxes are flowing in, chances are additional funds will be needed to balance the budget before the end of the fiscal year at the end of June.

Board Chairman Arthur Bordeau said Thursday that a check with the Maine Municipal Association revealed that reserve accounts cannot be used for items other than what they are designated for unless, residents give approval at town meeting.

He said he asked the assistant to the town manager, David Errington, to research whether such permission was granted in 1991. The result of that search was unclear, said Bordeau, so the board will refer the matter to the town’s attorney, Geoff Hole.

The town’s deficit is the result of over-estimated revenues and several unexpected expenses, such as the purchase of a new boiler at the recreation center, and significant overtime pay for the police department.

The town had planned to lease and purchase two cruisers, but because of the financial situation, decided to order one, and make transmission repairs to another.

The board learned that the town could save about $12,000 annually if 94 streetlights, and every other one in the downtown area, were removed. No decisions were made on that suggestion. The town is also about to begin talks with neighboring Dixfield and Rumford about the possibility of merging some services, such as police coverage.

At a previous meeting, the board eliminated their salaries, ordered a hiring freeze and talked of reducing several full-time municipal positions to part-time ones.

Although the board will likely deal with the financial situation during a part of every regular meeting in the foreseeable future, Bordeau said he plans to set a special workshop to work exclusively on ways to cut expenses sometime within the next few weeks.