Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1914-05-26
LEWISTON GREATLY
CONCERNED BY BILL
FORS1S0 INCOME TAX

Lewiston, Me. May Pa bill for
$3.50. being 1 per cent. of the income
of $4,000, received by the city of
of Lewiston from its holdings in the
Lewiston and Auburn railroad, other
wise known as the Grand Trunk from
Lewiston to Lewiston Junction, has
been received by the city from the
United States government, under the
income tax law.
The question whether or not to pay
the sum without further discussion is
interesting because it presents certain
phases of municipal ownership and
liability that have not been brought
previously to public attention for
many years.
Ex-City Treasurer Callahan, now
State auditor. believes that the city
is not liable for this amount, because
the city is paying out a large part of
rental money upon the bonds which
were issued originally to pay for the
building of the road, but which do not
stand at the present time as railroad
bonds, because they have been refund
ed into municipal bonds and merged
in the general issue.
The history of the financing of the
Lewiston & Auburn railroad dates back
to the days of long ago. 1t was some
where around 1874 that this road was
built and the original proposition was to
construct it for $500, 900, issuing the city
bonds to that amount. 1t was then found
that $500, 900 would not build the road, so
the road was mortgaged for $4,000 addi-
tional and the rental from the lease to
the Grand Trunk was pledged to pay
the bonds and interest. These bonds were
callable in 1886. which was during the
mayoralty administration of the late
Charles Walker. Three-quarters of this
road was owned and built by Lewiston
and one-quarter by Auburn and 1t was
upon this proportion that both Liabilities
and rental are now and always have
been based. OF the $4,000 mortgage
bonds .of the second issue 100000 were
paid. Then came up the question, in 1885,
of what to do with the remainder. There
were two views. widely divergent, preVa-
lent among the best business men and fl
nanciers of the city at that time ii was
finally decided to take the $4,000 out OF
the sinking funds of the cities, sS6,0oO
from. Lewiston and ST., 600 from Auburn,
pay the balance and return the amounts
to the sinking funds from the amounts
received from rentals. This was in Feo-
ruary, 1886, and in 1886 the rental came
in directly to the city instead of gong
directly to the bondholders, thereby re-
dueirg the tax rate in that year
The $500, 1000 of the original per
cent. bonds issued for the building OF
the road were callable in 10 years.
They were refunded in 1883 Two
hundred thousand of this 100000 have
since been refunded and are now In
the bonds of the city, among her IN
debtedness upon which the city has
been paying $4,000 of interest ever
since and is paying so today.
The city treasurer followed out the
sources of the citys Indebtedness and
listed the bonds, as they belonged, so
much coming from construction or
the water works, SO much for build
ing the L. & A. Railroad and so much
for the various other evidences of
debt.
Lewiston is said to have 100000 of
bonds outstanding today on which 1t
pays interest to the extent of $4,000
per annun.
Under the income tax that amount
may be deducted from the income,
showing the net income upon which
the per cent. must be paid. This
should reduce the net income by that
and in the course of years
should amount to considerable sum.