MERRILLVILLE | The town is suffering from a major cash shortage, and if the situation doesn't improve soon it may not be able to pay operating expenses and employee wages.

A letter to town employees says if Clerk-Treasurer Rose Ann Antich-Carr doesn't improve the financial situation by Nov. 7, "all town functions and facilities, except the Police Department, will be closed or suspended."

Town councilmen said the letter was sent to warn town employees of the possibility, but they are hopeful such action can be averted.

"We're not saying it's going to happen," Town Councilman Richard Hardaway said. "This is a possibility."

According to the letter, "the lack of tax collections" plays a major role in the town's financial woes.

Another financial issue facing the town is money missing from the clerk-treasurer's office. Antich-Carr said an initial audit by the Indiana State Board of Accounts found $41,000 missing in 2006, but now it appears more than $290,000 has been missing since 2001.

An audit of the office is expected to be completed by next week, according to state officials.

The letter also says the Town Council met with fiscal adviser James Bennett, who made financial recommendations the council has passed on to Antich-Carr. It also says Antich-Carr hasn't followed through with the recommendations.

"We've done all we can," Town Councilman Lance Huish said. "It's up to her."

Antich-Carr said she isn't sure if the town will be able to improve its financial situation by the deadline, and the only recommendation she hasn't completed is borrowing money from a bond. She said money can't be borrowed from bonds because they only can be used for a specific purpose.

Antich-Carr said she asked the State Board of Accounts if the town can borrow funds from a bond, but she hasn't received a response yet.

She also said she has been asking businesses to prepay their tax bills as a way to help the town's financial situation and has received promising responses from the businesses.

"That would carry us over," Antich-Carr said.

She also suggests town departments attempt to cut back as much as possible.

Town Councilman David Uzelac said officials need to come together to address the financial problems.

"We need to do something instead of shutting the doors," Uzelac said.