i say either take the pawn if you want but it sounds like he wants you to do that so he can make it his game and get in his comfort zone. but you could also transpose into a queens gambit game with 2 d4 and make him think about taking the pawn and losing tempo(just my thought).
Opening Situation


If I played that couldn't he do B5 and BE6? If he kept adding cover to the pawn, it could get fairly annoying later on (I play a very closed game).

After d5, if you play 2. Nf3, it becomes a reversed benoni with one extra tempo. Or, you could play 2. d4 and it transposes to a Queen's Gambit.
For my next match (high school league), I'm playing white and generally love the English Opening. The guy that I’m playing is the only one that really counters C4 with D5 that I have played so far. If I take D5 he brings his knight out to F6. Should I completely ignore the pawn? If so how do you recommend I start development? I was thinking of starting with NC3 or possibly pushing a pawn up to G3 followed by BG2 and NF3. I personally think I should protect it since he is practically giving me the center of the board.