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Board explores earned income tax as a tool to diversify revenue; would take about 18 months to implement
Summary
Committee members discussed the earned income tax (EIT) as a potential revenue source to reduce property‑tax reliance. Staff outlined an 18‑month timeline that includes a tax planning commission, public hearings and a possible referendum; members asked for scenario modeling and consultation with financial advisers and the township.
Committee members spent substantial time discussing whether an earned income tax (EIT) could be a feasible tool to diversify revenue and reduce pressure on Haverford Township homeowners.
What staff said: Staff described an implementation pathway that typically takes about 18 months: form a tax‑planning commission (a public advisory committee), engage consultants (the committee mentioned Penn Strategies as an example), hold public hearings, and — if the commission recommends it — put the measure on a referendum (typically in November) so any approved EIT would take effect the following July 1. Staff noted that initial collections in year one typically lag (staff said planners often estimate about 70% of full‑year collections the first year) and that the district would likely use early revenues as a credit against property tax bills before fully applying funds to reduce millage.
Clarifications and concerns: Committee members emphasized that EIT is a new wage tax for residents who work and is different from the federal/state Earned Income Tax Credit (EITC). Several members asked for model scenarios showing how an EIT would interact with current real‑estate tax structure, who would pay (residents who work in and/or outside the municipality), and whether thresholds or exemptions could be included. Staff noted that many Pennsylvania municipalities and school districts already levy an EIT and that Delaware County has relatively few jurisdictions that do not.
Next steps: Committee members asked staff to: (1) develop scenario modeling on revenue and distributional effects; (2) consult with PFM or other financial consultants and with neighboring districts that have already implemented EIT; and (3) coordinate with the township because implementation and potential revenue sharing is typically a joint consideration.
Ending: No decision was made. Staff and committee members agreed to gather analysis, convene public discussion and bring findings to a future committee meeting well in advance of any March decision timeline to place a referendum on future ballots.
