The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1896-10-02
a SINKING FUND SCHEME
LEGISLATURE WILL BE AsKED TO
MAKE CHANGE IN CHARTER.
dred Dollars Would Enable the
City TO Pay on Its Debt.

indianapolis is about the only one of
the larger cities of the country that has no
permanent sinking fund to meet its gen.
eraf debt. The permanent bonded indebted
ness of the city now aggregates 81, 1854, 500,
of which $4,000 natures in 1903, $4,000 in
1910. $200, 600 in 1915 and 1909, 500 in 1924, the
last amount in a little more than twenty
eight years. In the past 1t has been the
custom to pay off bonds by refunding, as
there was no provision by which the city
could funds to meet them as
they matured. Controller Johnson, Mayor
Taggart, City Attorney Curtis and other
members Of the administration have been
trying to devise a scheme to the
accumulation of a sinking fund, but after
consulting the laws they decided that 1t
was unwise to undertake the plan without
first securing ar amendment to the city
charter which will give the necessary au-
thority and provide the necessary safe
guards for the preservation intact of the
fund when it is created. In 1873 there was
a sinking fund of about $1,000 In the city
treasury, but at that time the city became
pressed for bonds and the money was
transferred to the general fund, instead OF
being held in reserve to meet maturing
debts. Controller Johnson says that some
thing would have been done this year to-
u a AAtS liS Va
fund if it had not been feared that the
experience would be repeated and that
some future administration would step in
and appropriate the money for some other
purpose than that for which it was in
tended.
Controller Johnson has had considerable
correspondence with other cities and finds
that in most of them the sinking fund
is controlled by a board of sinking fund
commissioners 1t is the policy of most
cities to invest all accumnlations to the
fund in their own securities.
For instance" said Mr.. Johnson, 'ff we
had a sinking fund here and it became
necessary to make a temporary loan. say
of $50, 600, the city could borrow from the
sinking fund. Instead of paying out in
terest to strangers, the city would pay it
to the sinking fund, and in the end save
all moneys now paid for that purpose
In 1909. twelve years from now, the hrst
of the bonds, $4,000, mature. Mr.. Johnson
says that a tax levy of 10 cents on $l,VW
ought TO produce $4,000 a year in the mean
time, aking into consideration the in
creased valuation of property for purposes
of taxation. In twelve years, on this basis
of calculation, without counting interest,
there would be $1S0.000 in the sinking fund,
much more than enough to meet the bonds
maturing at that time and the subsequent
year. The controller says that there is no
question but that the amount accruing
to the sinking fund would exceed $4,000 a
year after the next eight or ten years. BY
the time the last payment natures, he
thinks it ought to run 100000 or $4,000 a
year. He says that from what study he
has already given the matter, tnere is no
doubt in his mind but that the sinking
fund would be sufficient in twenty-eight
years to wipe out the entire bonded debt
now outstanding.
Although the matter of securing an
amendment to the charter to give the nee
essary authority for the creation of a sink
ing fund has been discussed by the city
officials, no definite conclusion has been
reached as to the details of the plan. In
some cities the Mayor, city controller and
heads of the different departments consti-
tute the board of sinking fund commits
sioners Mr.. johnson says that is a
mere matter of detail, however. The main
idea will be to have the law provide
specifically for what purposes the fund is
to be created, how it shall be invested and
that it shall not be used by the city for
any other purpose than that for which it
is created, viz, to pay off the city'S PERM
anent Indebtedness.
1T is true, said Mr.. Johnson, that the
thirteen years, but unless something is
done now to meet them the city Will have
to fall back on the old plan of refunding.
BY creating a sinking fund, the entire deot
will be provided for, so that 1t can be
wiped out when it becomes due, instead of
being allowed to stand year. after. year. A
trihing levy, say l cent on the 800, would,
l think. produce enough revenue. No one
would feel such a LEVITT only amounts to
fund we would not have to go away from
home TO make temporary loans, and the
GltN III dlSO 1NtSI lllt lilhAdS Ihlid Ill
her own Improvement bonds. With the in
terest pillng up and being compounded
every six months. l have no doubt that
the sinking fund would be large enough
10 wipe out the last dollar by the time that
last series. 1,009, 500, natures in 1924. l don't
believe anyone will object to the idea, .un-
less it is some one that thinks a public
debt is a public blessing"
There has been some talk in the con-
troller's office favorable to an amendment
of the Barrett law. Many times people
whose assessments for public improvements
are very small. in many instances less
under the Barrett law. One man even in
sisted on paying an assessment of 40 cents
in the ten annual installments. His was
an exceptional case, however. 1t has been
suggested that the law should be amended
so as to provide that all assessments above
a. given amount, say so or $12, might be
paid under the Barrett law. But to this
proposition there IS some objection. Con-
troller Johnson says that 1t would be as
great a hardship to some men to pay SIS
as it would to others to pay $50, and be-
sides. he says that he doubts whether such
Il discrimination would be constitutional.
TO be that there is a vast amount of work
Involved in cutting up small assessments
into ten equal installments, calculating in
terest Semi-annually etc.
I The controller and county treasurer are
agreed that it is not only practicable, but
wise, to secure an amendment to the city
| charter providing for a separate claSsifica-
| ton of special city assessments. If neces-
sary. the city would even be willing to as
sumo the increased expense of the treasur-
er's office.