Omaha daily bee., 1898-08-11
WESTBERC DEFENDS HISPLAN
Says the Sinking Fund Warrant Scheme
Saves the City Money.
DISAGREES WITH THE CITY ATTORNEY
1t Places Each Improvement District
on Its own Bottom, and Reveals
Who Are Striking Their
Taxes.

, There is a decided variance of opinion
regarding the merits of the special sinking
fund warrant scheme between City Comp
troller Westberg, who strongly advocated
it at the time of its adoption, and City At
torney Connell, who last night rendered
an opinion to tie council discouraging its
further use. City Attorney Cornell declared
the scheme was a bad piece of fnancier-
ing" City Comptroller Westberg insists
that it is a good piece of bookkeeping
and for that reason will fight for its main
tenance.
This sinking fund warrant plan is the di-
rect outgrowth of a new scheme of meet
ing improvement district bonds inaugurated
by the city comptroller. According to the
old way the taxes and assessments col
lected for improvements in all the districts
were Jumped together and out of this dis
trict Improvement bonds and coupons were
paid as they matured. According to the
| new way the collections of taxes and assess
| ments in each improvement district are put
into that districts fund to meet the bonds
and coupons of that same district as they
mature. In this way every district stands
upon its own bottom declares City Comp
troller Westberg.
AS soon as this system was put in vogue,
however, it was found that in many of the
districts a goodly portion Of the assess
ments for improvements had never been
paid in. Consequently there was no money
on hand when the bonds and coupons Of
those districts fell due. 1t was necessary
that some scheme should be devised to pre-
serve the city's credit, as the obligations
matured and it was out of this necessity
that the special sinking fund warrant
scheme was born. In each of these delin-
o,,apt dictrirtc tho rity conDtro1Ier forppod
a sinking fund, composed of the uncollected
taxes and accrued interest, and against this
fund the warrants that paid the obliga-
tons were drawn.
Why Cornell Objects.
OF course, when there is no money in
the sinking funds to take up these war
rants they must be sold and they draw I
per cent interest Immediately after they
are registered. 1t is on this account that
City Attorney Cornell objects to the scheme
He declares that it would be much cheaper
for the city to issue renewal bonds wher-
ever there is no funds to pay the maturing
district bonds and coupons. These renewal
bonds could readily be sold at 4 per cent
interest, thereby saving the difference ii
interest between that rate and the 7 pei
cent that the warrants would draw.
City Comptroller Westberg agrees par.
TALLY with this idea of the city attorney
but he maintains that the sinking funt
warrant scheme is still needed. He said:
According to law the treasurer canno
pay out a cent without a warrant from the
comptroller. How can l draw such a war
rant when no funds exists against which
it may be issued? The required fund il
created by the special sinking fund scheme
To be sure, there Is no money In thes,
sinking funds, but they may be replenishet
as the city attorney advises. Renewal bond
at 4 per cent shoull be issued and sold AM
with the proceeds the warrants could b.
taken up before they commence to draw
interest. But all the while l must hav
a fund against which to draw warrants t
pay maturing bonds and coupons when tn
districts have no cash balance on hand
This scheme of renewal bonds, however, |
only practicable in case the amount of tn
maturing obligations Is considerable. ]
they amount but to $50 or SIS, as in man
cases they do, it would be ridiculous I
issue renewal bonds for such small sums
In such cases | should say that no bonds b
issued, but the city invest in the warrant
with other city funds and not let ther
r go to outside parties. In this way the cit
' will lose nothing.
; Citv is Not n Loser.
"As a matter of fact the city has not bee
loser as a result of the scheme. The pla