The Coconino sun., 1916-11-03
GOVERNMENT EXPERT CLAIM
 SHOULD BOND FOR ROADS


 People of county intending to raise funds for highway improvement would do we'll to consider the advan- tages to them of the deferred serial plan over the ordinary sinking-fund plan of retiring long-term bonds. Un- der the serial plan, certain amount of bonds is retired each year and the bonds so retired cease to be an inter est charge on the community. Under the sinking-fund plan more of the bonds is retirable until the end of a definite period, and the entire sum raised bears interest for the entire life of the bond. The county, there fore, pays interest on the money so borrowed and in addition sets suffi- cient to retire all the bonds when they become due. The sinking fund is de- posted with banks and earns some interest. This interest ordinarily is only per cent, whereas the county has to pay 5 or per cent to its bond holders. The serial plan is a much cheaper method of raising money for road improvement, even when the sinking fund earns interest as high as 4 per cent, and in the opinion of the road specialists of the department should be utilized whenever it is pos sible to market serial bonds.
 In a study of the road bond issues of several counties, J. E. Pennybacker and M. O. Eldride, of the Division of Road Economies, Office of Public Roads and Rural Engineering, found that the serial plan, if it had been adopted by several counties, would have saved the taxpayers in one coun- ty $154 ,269, in another county ESQ., TOP, and in a third county $65,367, over the other plan with a sinking fund bearing interest at 8 per cent. With a sinking fund earning 4 per cent, the savings would have run as high as $72,2SS in one of these coun- ties. These conclusions appear in the recently published Department Bulle- tin 393, Economic Surveys of County Highway Improvement.
 The following concrete examples are taken from this bulletin:
 "In Dallas County, Ala, the bonds amounted to s35O,OOO, payable in 30 years at per cent. Assuming the sinking fund to bear per cent inter est, as set forth in the chapter on Dallas County, the total financial burden to the county for interest and the liquidation of the bonds during the S0-year period will be S745, TORSO. An equal amount of bonds at the same rate of interest, if issued under the deferred serial bond method, with the first bonds payable 6 years from the date of issuance and an equal amount payable each year thereafter for 24 years, would cost the county at the end of the 30 years s665,000, or a difference, as compared with the sink being fund method, of s80,702. If 4 per cent could be realized on the sink ing fund instead of 3 per cent, the saving for the deferred serial plan over the sinkingfund plan would still be S47,216.
 "Landerdale County, Miss, which issued S500,000 of and 51s per cent bonds, adopted the deferred serial bond method, with the first payment coming II years from the date of the issue and the last payment 25 years If the county had issued the bonds or the 5-25-year basis the cost would have been $906,s75, as compared with the cost on the basis adopted of s972,232, or difference of $65,367.'
 Even in the case of small issue the advantage of the serial plan is illustrated in Dinwiddie County, Va This county issued $105,000 of 5 and 6 per cent bonds, payable in 30 years but the bonds are callable after 2( years. Assuming that they will be re tired at the end of 25 years on tho sinking-fund plan, with interest or sinking fund at per cent, the tota cost would be s218,031, whereas ii they had adopted the 6-25-year seria method the cost would be $201 100, oi a difference of $16,931.