In a six-to-one vote on Monday, Nov. 9, the Borough Council of Swarthmore passed a motion to implement an earned income tax (EIT) of 1% beginning early next year. Once the measure takes effect on Jan. 1, Swarthmore College will deduct revenue directly from the paychecks of the roughly three-quarters of employees who are subject to the tax.
The EIT’s approval comes less than one year after the college contributed $638,000 to the borough in order to avoid the adoption of a similar tax measure.
How the Tax Works
According to a Sept. 14 presentation by the Council, 28 out of Delaware County’s 49 municipalities already draw on EITs for revenue. The tax applies to salaries, wages, tips, and bonuses, with the exception of payments for disability benefits and retirement support.
Swarthmore’s EIT will affect the majority of those who live or work in the borough, with a few key exemptions. People living and working in two different municipalities with EITs only pay the tax in the municipality with the higher EIT rate, meaning that commuters from municipalities with EITs above Swarthmore’s 1% rate will not be subject to the tax. According to college Vice President for Administration and Finance Rob Goldberg, roughly 25% of Swarthmore employees fall into this category.
The majority of Swarthmore College’s student workers will also be exempt, due to a clause added by the Council that excuses all workers whose annual income sits at or below $12,000. However, since the college is required to withhold the tax amount from all employee paychecks automatically, students will have to file for refunds independently each year. Resident assistants earn an annual income too high to qualify for the exemption.
The Borough Faces Financial Struggles
Swarthmore borough officials estimate that the EIT would generate between $2.8 and $3 million in annual revenue. According to council members who communicated with The Phoenix over email, the borough could desperately use this infusion of funds.
“While the council has been able to balance its budget every year,” explained council member Angie Tseng, “existing revenues barely covered the borough’s basic expenses. As a result, there has been chronic underfunding of operating and capital reserves, and this underfunding is evident in our buildings and equipment which are patched together and on their last legs in many cases.”
These basic expenses include the costs of running the borough office itself, support for regular public works, maintenance of local infrastructure, and — the central source of strain in recent years — emergency services. According to Tseng, the council was unable to meet the budget requested by the Swarthmore Fire and Protective Association (SFPA) for 2026.
Borough fire safety costs have risen over recent years due to a combination of logistical changes. The first, says council member David Boonin, is the gradual transition of the local fire department from a primarily volunteer-based organization to an institution almost completely staffed with paid employees. In the past, Swarthmore students made up a significant portion of the SFPA’s volunteers — as much as 60% in the early 2000s, according to Borough Mayor Conlen Booth. 25 years later, student participation in the organization is negligible.
Another factor is a dramatic increase in the cost of fire safety equipment. Tseng noted that “one of the largest critical capital expenditures that we need to plan for is replacing the ladder and engine trucks used by SFPA, which are well past their useful life.” She added that the price of fire trucks has doubled since 2020, “so that they now cost millions of dollars each and the lead time to receive a truck is now 3-4 years.”
The 2025 closure of the local Crozer Health hospital system has exerted further financial pressures on the borough’s emergency medical services (EMS). While the borough has recently joined with four other Delaware County municipalities to establish a joint EMS authority in Crozer’s place, Boonin emphasized that the transition to the new system continues to complicate Swarthmore’s EMS revenues and expenditures.
In order to address these budget challenges, the borough has adopted a more aggressive approach to financial management. According to Tseng, Borough Assistant Manager Al Ashcom and Interim Borough Manager Dave Unkovic have “spent months reviewing our budget and financials line by line so we could fully understand different revenue streams, funds, and obligations.”
Tseng also mentioned that the council had engaged Key Stone Municipal Solutions for consultation on future revenue generation measures, including the EIT. Council member Cindy MacLeod added that “2027 will be our first year to track our budget in our updated financial system and proper categories with full transparency on costs.”
The College and the Borough’s Financial Relationship
In email correspondence with The Phoenix, Vice President for Communications and Marketing Andy Hirsch emphasized that the college will not be drawing any revenue from the taxation measure. In fact, in an earlier email, he expressed concerns that the tax might have an “adverse impact” on members of the campus community. Given that the college is responsible for 42% of the jobs and about half of the estimated aggregate worker earnings in the borough, its employees will bear the vast majority of the new financial burden.
For that reason, the college attempted to avoid the imposition of an EIT last year. When representatives of the borough council shared their financial concerns with the college and proposed an EIT as a potential solution for 2026, the college contributed $638,000 to the borough in addition to its annual payment of roughly $300,000, an effort to alleviate the need for the tax.
“We were clear with both the Borough and the campus community that this was a one-time increase to our annual financial support to the Borough to help offset its short-term budget pressures,” Hirsch wrote.
Annual contributions to the borough are built into the college’s budget, but college administrators made no plans to sustain this radical increase in funding. While they were aware that a one-off financial boost could not prevent the implementation of an EIT in future years, Hirsch noted, “I think it’s fair to say we were surprised it came back around so quickly.”
On the relatively rapid turnaround time for the tax, Borough Council Vice President Janna Garland wrote the following:
“The College’s $638,000 contribution last year was significant, and we are grateful for our partnership with Swarthmore College. However, that level of support will not continue at the same amount in 2027. This makes it even more important to establish sustainable, predictable revenue sources rather than rely too heavily on real estate taxes or any single source of funding.”
EIT May Lower Property Taxes for Borough Homeowners
Garland also wrote that the council hopes the EIT will allow the borough to “reduce our reliance on real estate taxes for revenue,” a sentiment echoed by several of the borough council members that The Phoenix contacted. Both the Sept. 14 presentation and a more comprehensive slide deck available on the borough’s website repeatedly highlight property tax cuts as an end goal of the EIT’s implementation.
While property taxes — often referred to as “millage” — currently account for the largest portion of the borough’s annual revenue, Tseng noted that the council’s new financial consultants found the local rate to be “relatively low compared to other municipalities.” Raising the real estate tax rate would make significant progress toward addressing the borough’s budget hole.
However, Tseng suggested that this measure would not be the ideal solution for the issue: “It would be better to diversify our revenue streams, and operating costs tend to increase due to inflation, but real estate is only reassessed every ten years, so we’d be constantly raising the real estate tax rate if we relied on real estate taxes alone.”
Additionally, Boonin emphasized that higher millage rates would come at greater cost to Swarthmore residents than EIT. Where the former would draw revenue from borough homeowners, the latter passes a significant portion of the costs onto non-resident workers, like many of the college’s employees. Boonin acknowledged concerns that leveraging an EIT to support a property tax cut would ultimately amount to a transfer of wealth from working-class college employees to homeowners in the borough.
“If you’ve got a wealthy retiree who is bringing in money not through earned income, but through passive income, they wouldn’t be taxed on that. And they’re living in a nice sized house, so they’re getting a big [property] tax break now. Compared to some lower income person who’s working three jobs to make ends meet, you say, ‘is that really what I want?’”
Nevertheless, Boonin believes that the possibility of creating such a dynamic is outweighed by the potential benefit to borough residents. “You can always come up with stories,” he says. “What I find here is that we’re talking about a 1% tax. It’s not unusual that more than 50% of whatever you bring in is going to taxes. So when I say there’s 1% and there may be some marginal winners or losers, it’s not material or significant in the whole picture of things.”
When asked about the EIT’s potential disproportionate effect on low-income workers — who may be impacted significantly even by marginal taxation — Boonin suggested that the college could take the lead in alleviating those concerns: “If the college is that concerned about it, they could give a raise to all of their low-income employees, equal to a little bit more than 1%, and they’d walk away just fine.”
While Hirsch did not comment on any plans to boost employee incomes, he highlighted some of the college’s financial constraints.
“Our largest expenses, including financial aid, salaries and benefits, and building and facility improvements, continue to grow faster than our revenue … We had a $5.5 million deficit last fiscal year and a $3.4 million deficit this year. Absent any intervention, the gap between our revenues and expenses would grow to more than $30 million by FY 2031. Fortunately, through careful stewardship of the College’s resources, we’re on a path to eliminate our operating deficit within the next two to three years.”
As the borough and the college continue to contend with respective financial limitations, it remains to be seen how their solutions to these issues will shape their relationship moving forward. While neither Hirsch nor the members of the borough council specified any new plans for future financial collaboration, both parties emphasized their commitment to economic partnership.
