The record-union., 1891-02-09
AN IMPORTANT MATTER TO TAX
PAYERS-THE SACRAMENTO BOND
RIIIS.

Two bills are pending in the Legisla-
ture affecting Sacramento's revenue in
an important manner. Under decision
of the Supreme Court we were COM
PEELED, few years ago, to begin paying
to the city bond-holders IS per cent. Of
our gross revenue; that is, 55 per cent. of
per cent for the general fund, and 55
per cent. of gross licenses, water rents,
etc. Prior to that, for some twenty
years, we had paid the SIS per cent. on
the basis of net revenues.
The bills referred to interpret the word
revenue" in the law concerning our
Indebtedness, to mean net revenue; that
is, the sum we realize after paying the
cost of securing any revenue at all, and
that means the maintenance of the de-
partments of municipal government es-
sential to the collection of revenue.
The bondholders now appear before
the legislative committee and resist the
passage of the bills on two grounds-that
the Legislature has not power to impair
the contract; that the contract itself does
not call for SIS per cent. net, but by omis-
sion of the word met" provides that So
per cent. of the gross income shall be ap-
piled to the purposes of redemption and
interest paying.
The Supreme Court did, it is true, de-
eide that revenue meant in the original
Act gross income. Four Justices SO held,
three dissented. Two of those dissenting
are now upon the bench, three of those
who affirmed the bondholders PROPOSE
ton are not now upon the bench. Be-
lieving that the court erred, that it may
reverse itself, as it has done before. the
people are desirous of relieving them
selves of onerous, almost unbearable bur-
dens, by again insisting upon the fair,
reasonable and equitable position that net
revenues, not gross, were meant when So
per cent. was set aside for the redemption
Of city bonds and the payment of interest.
The law authorizing the issuance of the
bonds was not a contract, and the pro-
posed new legislation is not impairment
of contract. 1t proposes to interpret the
word revenue in the original law, and
that it has the right to do. Upon that
question the friends of the new bills are
confident of the rightfulness of their
cause.
Clearly it was the intention when
fhn
have it paid out of the city's gain, its
profit upon its financial system-that is
to say, what it has after paying the cost
OF raising revenue. No creditor demands
of his debtor that he shall pay him to the
destruction of his ability to pay at all.
When one is directed to pay by court
order stated sum, it is not required that
he shall starye himself to do it, or be cut
off from the means of gaining q iveli-
hood.
Let us take the income of the water
works-55 per cent. of the water revenue
is to be paid to the bondholders. But
there is cost for machinery, pipes, fuel,
oil, and operatives to run the works be-
fore any revenue can be derived. If the
bondholders take 55 per cent. of the gross,
they compel the people to pay an addi-
tonal tax for pipes, machinery, fuel, oil
and operatives, and this is as direct
payment to the bondholders as if handed
over to them, because instead of leaving
the city As per cent. to live upon, itleaves
1t only As per cent, less the cost of fuel,
oil, pipes, machinery and operatives.
Now it was never intended by the Legis-
lature that the city should pay more than
IS per cent, but the construction of the
court gives the creditors 55 per cent, plus
cost of machinery, pipes, fuel, oil and op-
eratives.
1t was not presented to the Supreme
Court when the late case was argued, that
the water works referred to in the origi-
nal Act are gone, worn out, and have
been abandoned. Suppose the city had
never set up, as it did, a new system,
what would the bondholders have done ?
But the city did set up wholly new sys-
tenn for gravitation it substituted pumps