I’m looking for ways to reduce the amount of expenditures that we absolutely have to disperse in order to maintain the same level of taxes and keep it in balance.”

William McAllister

HONESDALE, PA — A few weeks after voting to impose a one-percent earned income tax (EIT) on employees who live and/or work in the borough, the Honesdale council reversed its decision at a public meeting on November 27. 

To make up for the $360,000 the EIT was projected to generate in 2024, councilor and finance chair William McAllister said that the borough will raise property taxes and trim some expenses from the budget.

This additional revenue is particularly needed for stormwater repairs which have dogged councilors for many years now. The sheer cost of updating the borough’s decades-old infrastructure has prevented past councils from effectively addressing the flooded streets, collapsed pipes, sinkholes and property damage the town experiences as it gets hammered with increasingly heavy rainfall each year.

Contention in the run-up

This change comes after a contentious meeting earlier in November which attracted a battery of public residents who decried the EIT as an unfair burden on local workers and a cumbersome obstacle to local employers. 

Council president Michael Augello warned residents at that meeting that the alternative would mean residents could expect to see their property taxes raised by 25 percent—or 1.5 mills. The residents in attendance at the November 6 meeting unanimously said they’d prefer the higher property taxes to an EIT. Councilor Jim Hamill doubted that the feelings of the residents at that meeting were indicative of the entire borough’s population.

“There are folks here tonight who own property, and reside here, and work hard… who can foot that bill,” he said on November 6. “But we definitely have some people, who are not here tonight, who can’t.”

In light of the residents’ dissent, McAllister offered a motion to forget the EIT right then and there and move forward with a higher millage rate. The other councilors shot it down, however, in a 4-2 vote in which only McAllister and Augello voted in the affirmative. The councilors then voted to move forward with the EIT in a 4-2 vote. Councilors Jason Newbon and David Nilsen both voted against the EIT, despite the fact that they had also voted no to the alternative presented just moments prior. This left some of the other councilors perplexed.

Councilors butt heads over budget

At the more recent meeting on November 27, McAllister once again offered an alternative to EIT. By raising the borough’s millage and cutting some expenses out of the budget, McAllister said the borough could raise about $200,000 in additional taxes and save about $150,000 in spending.

Hamill asked from where the $150,000 would be cut, and became—in his own words—“indignant” about the lack of specifics in McAllister’s response. He called the decision to scrap EIT for higher property taxes “very shortsighted.”

“I’m looking for ways to reduce the amount of expenditures that we absolutely have to disperse in order to maintain the same level of taxes and keep it in balance,” McAllister said.

Hamill complained that “we don’t see those [cuts] reflected in any documents in front of us” and said “we cannot proceed in this manner.”

“Put it on the paper, Mr. McAllister. Do your work!” Hamill said, demanding a line-item inventory of what would be cut from the budget.

McAllister defended himself, saying he’s worked “diligently” and “tirelessly” to find solutions to the concerns residents raised at the previous meeting. He said he would be able to provide the specifics Hamill requested at a later meeting.

“I don’t feel very confident,” Hamill began to respond, to which McAllister shot back, “Well thank you. I don’t care about your confidence.”

Mayor Derek Williams offered some Census Bureau statistics to the conversation.

“Seventy percent of our households in Honesdale Borough are income constrained,” Williams said. “That’s a high number to consider. And that number is higher for Honesdale Borough than it is for any of the other county seats across the commonwealth, and it’s higher than the other municipalities in Wayne County.”

Augello said that the millage increase will affect all taxpayers in the borough, placing a fairer burden on a larger number of people, whereas the EIT would be placing a larger burden on a smaller group of people. At that point he asked for a roll call vote.

Council votes, budget talks to continue

The vote to scrap EIT in favor of a millage rate increase passed 5-2. Councilors Eric Cooley, Newbon, Nilsen, Augello and McAllister voted yes. Councilors Tiffany Rogers and Hamill voted no. In order to discuss McAllister’s promised budget cuts with enough time for them to be advertised and reviewed by the public, the council voted to hold a special meeting on Wednesday, December 6, at 6 p.m.

The final budget must be adopted by December 31. However, the budget may be reopened again in January of next year.