Property tax hike likely in Wayne County seat after business revolt killed earned income tax last month; 46% of county households already struggle to afford basics

HONESDALE, WAYNE COUNTY — Honesdale Borough Council meets Tuesday, Dec. 23, to vote on a 2026 budget that must be adopted by Dec. 31 — and residents of the Wayne County seat should expect another property tax increase.

The likely hike comes after council rejected a 1% earned income tax on Monday, Nov. 24, when Mayor Derek Williams cast the tiebreaking vote against the proposal following a revolt by local business owners. That left a roughly $400,000 hole in the spending plan with little time to find alternatives.

It’s the fourth time since 2021 that Honesdale Borough has proposed and rejected an EIT — and the fourth time the Wayne County seat has turned to property taxes instead.

What to expect Tuesday

Honesdale Borough Council meets at 6 p.m. at Borough Hall, 958 Main St., Honesdale.

With the EIT off the table, the most likely path mirrors 2023 and 2024: a property tax increase combined with spending cuts. Finance committee chair William McAllister has said he’s looking for ways to reduce expenditures, though specifics remain unclear.

The borough currently levies 7.58 mills in property taxes after a 1-mill increase last year. A homeowner with $100,000 in assessed property value pays $758 annually.

If council raises taxes by another mill to cover the EIT shortfall, that homeowner would pay $858 — a 13% increase on top of last year’s 15% jump.

How the EIT died — again

The Nov. 24 meeting drew an overflow crowd of business owners opposed to the wage tax.

Susan Rollison of Prompton Tool stormed out mid-meeting after delivering a warning: “If you give us this wage tax, I’m going to lose my employees and my business. Learn to balance your budget.”

Tom Shepstone of Shepstone Management Company presented a letter signed by 38 businesses.

“This is a very, very unfair tax,” Shepstone told council. “It’s not an income tax; it is a wage tax. Anybody who makes their living off of dividends or investment returns, they do not pay anything.”

The vote split 3-3. McAllister, James Hamill, and Tiffany Rogers voted yes. James Cordaro, Kim Fisch, and Jason Newbon voted no. Council President James Brennan was absent.

Williams broke the tie, siding with opponents.

Why Honesdale Mayor Williams voted no

The mayor pointed to data showing Honesdale Borough has the highest concentration of financially struggling households of any county seat in Pennsylvania.

More than 70% of working households in Honesdale qualify as ALICE — Asset Limited, Income Constrained, Employed — according to United Way of Pennsylvania. These are families earning too much for government assistance but not enough to cover basic living costs.

Across Wayne County, 46% of the county’s 20,314 households fall below the ALICE threshold: 11% in poverty and 35% classified as ALICE.

“If you compare [the EIT] to a potential similar generation of revenue through a property tax… that incremental increase in tax burden on property owners is significantly less than what that tax burden would be on working families who are already struggling to pay the bills,” Williams said on Nov. 24.

But a Pennsylvania Economy League analysis presented on Monday, Oct. 28, 2025, found Honesdale in relatively healthy financial shape, with surpluses in four of the past five years. PEL consultants recommended an EIT to build flexibility into a revenue stream currently dependent on property taxes.

One detail rarely mentioned: Honesdale residents working in municipalities that already collect an EIT pay that tax to those communities. If Honesdale enacted its own, that money — about $106,000 annually, McAllister estimated — would flow back to the borough instead.

Honesdale’s stormwater crisis lurking behind the numbers

Whatever Tuesday’s budget vote produces, it won’t touch Honesdale Borough’s biggest long-term problem: a stormwater system that’s been failing for 50 years.

The Wayne County seat sits in a valley with hills on both sides and creeks flowing through. Past attempts to manage drainage — including a decision decades ago to pave over a creek bed with a parking lot — created problems that persist today.

On Monday, June 23, 2025, Honesdale Borough paid $136,000 to settle a lawsuit with Forest Street resident Bob Vonson, whose property was damaged by a stormwater project gone wrong. At a council meeting on Monday, May 12, 2025, Vonson brought documents dating to 1973 showing the borough repeatedly promised to address flooding, then abandoned responsibility.

“Certificates of hope, that’s what I call all of these letters,” Vonson told council. “No disrespect to the people here, and I know things take time, but youse already had enough time. Do it right the first time.”

Councilor James Cordaro, who chairs the stormwater committee, has said developing a comprehensive overhaul plan could take years. The borough budgets roughly $179,000 annually for stormwater repairs — a fraction of what’s needed.

A Jan. 4, 2023, Commonwealth Court ruling that stormwater fees constitute taxes, not fees, has complicated matters further. The case, now before the state Supreme Court, threatens a funding mechanism boroughs across Pennsylvania have used for drainage improvements.

Honesdale’s tax-exempt squeeze

Part of Honesdale Borough’s revenue challenge stems from what it can’t tax.

“Honesdale Borough is home to churches, it is home to a hospital, it is home to public county and state agencies and offices, none of which are taxable,” former Honesdale Borough Council president Michael Augello said at a November 2019 meeting. “About half of the borough is actually taxable.”

Honesdale’s population dropped from roughly 5,200 to about 4,200 over the past two decades, residents said at the Nov. 24, 2025, meeting. When buildings come down, parking lots go up — generating no property tax revenue.

“Every year, we are going to see our costs go up, we are going to see our property values go down, and that’s why we’re in a never-ending spiral of tax increases,” Augello said in November 2019.

Four years, four failed EITs in Honesdale

Honesdale Borough’s earned income tax saga now spans four years:

Fall 2021: Council discussed an EIT but dropped it after strong public opposition.

November 2023: Council enacted an EIT on Monday, Nov. 6, then reversed course on Monday, Nov. 27, following public outcry. The vote to scrap it passed 5-2. Council raised property taxes by 1.5 mills — a 25% increase — and adopted the budget on Dec. 16, 2023.

Fall 2024: An EIT briefly appeared in budget drafts but was scrapped before advertisement. Council adopted the 2025 budget with a 1-mill property tax increase on Monday, Dec. 16, 2024, raising total millage to 7.58.

November 2025: On Monday, Oct. 28, council voted to advertise a 1% EIT for the 2026 budget. On Monday, Nov. 24, council voted 3-3, with Williams casting the deciding vote against.

Each time, supporters say an EIT would grow with wages and shift burden off seniors on fixed incomes. Opponents call it an unfair tax on workers that exempts investment income.

Each time, property taxes go up instead.

How the Nov. 24, 2025, EIT vote broke down

In favor: William McAllister, James Hamill, Tiffany Rogers

Opposed: James Cordaro, Kim Fisch, Jason Newbon

Tiebreaker: Mayor Derek Williams voted against

Absent: Council President James Brennan

By the numbers

• $400,000 — Projected annual revenue from proposed 1% earned income tax
• 70%+ — Honesdale households qualifying as ALICE (Asset Limited, Income Constrained, Employed)
• 46% — Wayne County households below the ALICE threshold (11% poverty + 35% ALICE)
• 20,314 — Total households in Wayne County
• 7.58 mills — Current Honesdale property tax rate
• $136,000 — Settlement paid in June 2025 over stormwater damage
• 38 — Businesses that signed letter opposing the EIT
• 4 — Times since 2021 Honesdale has rejected an EIT

Honesdale Borough Council meets Tuesday, Dec. 23, at 6 p.m. at Borough Hall, 958 Main St., Honesdale. The 2026 budget must be adopted by Dec. 31.