HONESDALE, PA — To address holes in Honesdale’s finances, the Borough Council moved forward on October 28 with a tentative budget that would raise property taxes, but voted against …
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HONESDALE, PA — To address holes in Honesdale’s finances, the Borough Council moved forward on October 28 with a tentative budget that would raise property taxes, but voted against moving forward with an earned income tax (EIT) for the second time in this year's budget cycle.
The tentative $4.9 million budget presented on October 28 included both a property tax increase from 6.58 mills to 7.58 mills, and an imposition of a one-percent EIT. However, because the council voted not to advertise the EIT, the needed first step for the EIT's introduction, the budget must account for $325,000 of missing revenue which would have been generated by the EIT.
An earlier version of the budget discussed on October 21 included an EIT, but no property tax increase. At that meeting, the council voted against advertising the EIT to the public, a crucial first step for its adoption.
Some members of the community came out to speak against the EIT, both on October 21 and 28.
"You guys raised my taxes $1,200 from last year, that's a significant amount of money," said borough resident Paul Romano at the October 28 meeting of the borough council. "Now you've put your hand out asking for more money."
William McAllister, councilor and chair of the finance committee, told the River Reporter he'd left the October 21 meeting intending to revise the budget and remove the EIT but, once he dove into the numbers, he found unexpected holes in the budget, such as $400,000 in unanticipated expenses between October and the end of the year.
He said the the changed financial situation led him to include both the EIT and a property tax increase in the revised tentative budget.
EIT and property tax increase effects
The two sources of revenue would impact different sub-groups of Honesdalians, according to councilors.
Resident Romano estimated, all things considered, the average household in Honsedale was operating at a $4,000 a year deficit. "You guys are talking about taking more money out of pockets? This is ridiculous."
An EIT would impose a 1% tax on people who live and/or work in the borough, the burden of which would fall on people who are actively earning an income. The burden of higher property taxes falls on people who own property in Honesdale, including seniors on fixed income who wouldn't be affected by an EIT.
The imposition of either tax would further burden an already impoverished base of taxpayers. According to United for ALICE, a United Way database which tracks household income levels, 73% of Honesdale households have incomes below the basic cost of living, as defined by the United Way.
Councilors emphasized that the borough is also constrained in its finances.
Councilor James Hamil encouraged anyone who disagreed with the cost of the budget to look through it and pick out what items they believed could be cut. In his own cursory examination, it was really hard to find cuts, he said.
It's hard to maintain a balanced budget with the rising cost of everything, Hamil said, adding that unless the borough reduced services, it would need to find additional revenue.
The tentative budget will be available for the public online and at the borough offices starting November 4. It will be next discussed at the November 25 meeting of the borough council.
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