Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1883-10-02
SETTLEMENT OF THE CITY DEBT AND
REDUCTION OF TAXATION.

The outstanding indebtedness of the city
Of Sacramento, represented by bonds with
interest bearing coupons, amounts to ST.
040 900. 1t is safe to calculate that OF
this amount there are some lost, some de.
stroyed by fire, some that will never be
presented for redemption from other causes.
We are therefore justified in placing the
real liability at but 100000. But that
a very broad margin may be allowed in
the estimate we are about to make, let the
Indebtedness be stated at the first figures
given. OF overdue interest coupons there
are GLAZING amounting to- $500, 900. OF
these it is claimed that $500. 900 are barred
by the statute OF limitations. There re-
main, then, of valid coupons S240, 900.
But, as in the first case, let US suppose the
statute of limitations plea to be not good,
in order that the broadcast margin possible
in our calculation shall be made. We thus
have possible 81, $40, 900 to answer for.
AS the public is informed, there was an
offer made last spring by large holders of
bonds to settle the city indebtedness on
this basis All bonds at 62I cents of their
face, all coupons at so cents of their face.
Let US suppose that the bondholders will
still compromise with the city on that ba.
sis by reissue of bonds for twenty years,
bearing per cent. interest. The present
bonds bear per cent interest. We
would then have the following indebted
mes to answer for /:
Bonds, 81 o4O 900, at 62i cents .s65o, COO
Coupons 5000, 900 at so cents. 3OJOO0
Total to be refunded .....,.............s9 5O,ooO
Interest at per cent. requires per year.. s475o0
To provide this interest annually would
necessitste, on an assessment roll OF
Sill 900. 900 values, tax levy fraction in
excess of 43 cents, instead of 50 cents, as
now required by law under the decision of
the Court. This would leave US. out of a
general fund tax of per cent-or 81 on
the hundred of property valuaticn-57
cents for general city purposes, instead of
45 cents that will be left under the de-
cision of the Supreme Court. It is true
that we now levy total of 81 co. but it
must be remembered that we will pay to
the bondholders, and do now pay 55 per
cent. of net water rates, of Police Court
fines, harbor dues and licenses, ell of which
we will save and apply to maintenance
of the city government if we csn effect a
refunding. It will be seen that this would
enable us to limit the total city tax to a
levy of 81, or a figure very near to it.
But in this estimate we have made no
mention whatever of any provision for the
redemption of the bonds in twenty years.
To do 30, for that amount distributed over
such period, will require but = small sum
to be contributed to sinking and redemp-
ton fund, for the fund SO created would
bear interest soon, and thus add to its own
Importance annually. But it is fair to
conclude that the city would be able to
use such fund to even better advan-
tsge in bidding for the surrender Of her
bonds. say, in the course of FIVE years
hence. But we have in the treasury
the sum of $500, 600, which will be set
free by the compromise, for it is now held
fast BY litigation regarding the payment OF
interest coupons. Now this 5000, 600 can
be used, when freed, advantageously in two
ways-by being placed at interest to create
a redemption fund, or to immediate reduc.
tion of the compromise debt principal, on
which we must pay interest. Obviously
the latter plan is the sound oue-the one
good business sense dictates. II, then, we
take the 100000 and pay off with it a
part of the principal, we shall have but
$3.50, 900 instead of $3.50, 900 to answer
for. Instead, then, of tax levy of A.
cents TO pay interest, we snail need one Of
but 295 cents, and we shall have for gen,
eral city purposes 70s cents instead of A
cents as now under the decision, or instead
of 81 cents if We do not thus use the
500, 600. Bat the creditors Of the city
now litigating with her do not represent
the whole of the debt, but only about hall
of it. What, therefore, can We do as to
the other half? The answer is. that we
should do the best We can with shose who
ars at hand, and thus enlist them in our
interest to bring The others into the ar.
rangement, for obviously it will be to their
interest to have all the creditors placed on