Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1916-02-11
HIGHER TAX RATE
HACKERS PUZZLE
ON VOTERS VIEW
Necessary, They Say, if
Many Improvements
Are to Be Made
FINANCIERs FOR 1T
Postponement Will Pile UP
Debts Which Posterity Must
Meet, They Assert

The open and frank declaration by
Mayor Smith that an increase in the
city's take rate will propably he necessary
n Philadelphia is to begin the compre
hensive program Of permanent public i'm
provements now under consideration, is
the chief topic of conversation today In
political, financial and business circles
That Philadelphia is hobbled by taX
rate insufficient for current departmental
expenses and one which therefore can
not be made bear the added burden of
interest and sinking fund charges on new
loans for permanent improvements is ad.
mtted BY all But, will the voters submit
to a tax increase, is the question being
asked by politicians and officials In city
Hall.
To postpone action which will increase
the city's current revenues, tinanciers
point out. will not only hold up improve
T1ents now planned for Philadelphia, but
wilt at the same time pile up debts for
current expenses which posterity must
meet with interest added.
FINANCING PLANS.
The actual financing of the public i'm.
provemnts already begun or those which
the new Administration Is about to under.
take will be met from loans floated speci.
fically for that purpose. But the interest
and the sinking fund charges on these
loans will have to be met from the cur
rent revenues of the city, or, in other
words from direct and indirect taxes. On
bonds issued for 30 years the interest and
sinking fund charges total annually about
ca per cent of the amount Of the loan.
The City Controller is required by law
70 charge against the city's gross annual
tevenue the total of tnese interest and
sinking fund charges on all loans. before
ihe amount available for departmental
appropriations and general funds can be
estimated. Therefore 6la per cent. of
What may be the total of the loan hoated
COR the public improvement will have
~ be added to the annual fixed charges to
be met out of the taxes and other revenue
sources.
with Philadelphia already facing an op.
Grating deficit for 1916 of between
$4,000, 900 and $4,000 900, the impossible.
lty Of entering upon any extensive public
improvements without increasing the tax
rate or the revenue from some sources
can bn plainly seen, city hnanciers say.
The only great public Improvement
which can be carried forward without
adding materially to the present fixed
charges of the city are those of transit
and port improvement. And this by rea-
son of a provision included in the act of
Assembly passed last year increasing the
city's borrowing capacity from I to 10
per cent. on taxable property for transit
and port developments.
ISSUE OF JO-YEAR BONDS.
This provision made it possible. first.
for the city to issue 5O-year bonds instead
of 3O-year bonds under the additional 3
per cent borrowing limit. thereby re-
ducng the annual sinking fund charges
from 2la per cent. to / per cent. on the
par value OF the bonds issued: and. sec
ond, for the interest and sinking fund
charges on the bonds to be, met from the
net earnings of the transit and port i'm
provements when the latter have been
put on an income producing basis and
the same charges to be met from the
loan during the period of actual con-
struction work: and, third, when such
portion of the bonds have been issued
for the improvements are sustained as
10 interest and sinking fund charges from
the earnings of the improvements, the |
bonds may be excluded from the city's |
debt in calculating its borrowing capacity.
But for all other work. such as the long
planned South Philadelphia improvements,
the completion of the Parkway, the re-
building of the Philadelphia General Hos I
pital, an art musuem.. free library and |
the completion Of the Northeast Boule- |
ward, 6la per cent. of the total of the |
bond issue will have to be borne annually |
by the current revenues of the city and !
therefore directly by the taxpayers. This |
plain, is reached by adding the usual in !
terest of per cent. on city bonds to the !
25s per cent sinking fund charges on |
bonds fioated for 80 years.
AGREE ON INCREASED RATE.
The one and only solution of the prob |
lens city officials agree is to increase |
the tax rate. A considerable sum can |
be added to the city's annual revenue to- |
tai by readjusting the basis of the incl |
dental revenues, such as increasing the |
charge for fees i'm the Recorder of Deeds |
office, the Sheriff's office and the Register |
OF Wills office, But this amount would (
be insufficient by far. members of Coun- |
ellis Finance Committee say.
move has already been made to re- |
adjust the basis of the charges for water. |
Isl order to increase the revenue from |
this bureau. At the present time ac-
cording to the officials of the bureau /
water by the meter rate is being furnished /
At cents a gallon, while the cost OF /
pumping and filtration of the water il y 1
cents a gallon, The present ratio between /
the charges by the meter rate and charges 4
for persons not having meters is said TO .
be greatly in favor of those having the |
meters, and therefore not equitable.
A committee from Councils Is studying /
this problem, with view 10 changing |
the rates for city water. and increasing |
the city's annual revenue from this /
minor sources are changed 10 produce |
more annually for the city. the city ofi- |
eials say this sum will not be sufficient |
for the Immediate needs aside from pro- |
ducing any additional revenue for fixed |
charges on new loans.
While only so per cent of the city's /
annual revenue is from direct taxation, |
the great portion Of the revenue derived |
from other miscellaneous and incidental |
sources cannot be changed, owing to con |
tracts and agreements, such as those be- |
tween the city and the transit company |
and gas company. The tax rate, there |
fore, city hnanciers show, must be made |
to bear the great burden OF any additional |
revenue which the city must realize both |
to meet the present operating deficit and |
to meet the fixed interest and sinking fund |
charges on public improvements as |
planned