The Pioche record. [volume] (Pioche, Nev.) 1908-1925, 1916-11-10
RAISING ROAD FUNDS
Important Savings Effected by Issu-
ing Highway Bonds on Deferred
Ee,,.l Retirement Plan.

People of u county intending to
raise funds for highway improve
ment would do we'll to consider the
advantages to them of the deferred
serial plan over the ordinary sink
tund plan of retiring long term
bonds. Under the serial plan a GER
tain amount of bonds is retired each
year and the bonds so retired cease
to be an interest charge on the COM
munity. Under the sinking fund
plan none of the bonds is retired
until the end of a definite perio,i,
and the entire sum raised bears in
terest for the entire life of the bond.
The county, therefore, pays inter-
est on the money so borrowed and
in addition sets aside each year as
a sinking fund an amount sufficient
to retire all the bonds when they be-
come due The sinking fund is de-
posted with banks and earns some
interest. This interest ordinarily is
only three per cent, where as the
county has to pay 5 or per cent
to its bondholders. The serial plan
is much cheaper method for rails
ing money for road improvements.
even when the sinking fund earns in
terest as high as per cent, and in
the opinion of the road specialists
of the department should be util-
lied whenever it is possible to mar
ket serial bonds.
In a study of the road bond iss-
ues of several counties, j. E. Penny
backer and M. o. Eldridge, of the
division of road economies, office of
public roads and rural engineering,
found that the serial plan, if it had
been addopted by several counties,
would have saved the taxpayers in
one county S154,269, in another
county $S0,702, and in third coun-
ty $65,367 over the other plan with
sinking fund bearing interest at
3 per cent. With sinking fund
earning per cent, the saving would
have run as high as $72,2SS in one
of these counties These conclusions
appear in the recently published
Department Bulletin 393, Econom-
ic Surveys of County Highways and
improvement.
The following concrete examples
are taken from the bulletin.
''In Dallas county, Ala, the bonds
amounted to $350,000, payable in
80 years at per cent. Assuming
the sinking fund to bear per cent
interest, 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 30-year period will be
4 S745, ,702,S0. An equal amount o.
! bonds at the same rate of interes
If issued under the deferred seria
bond method, with the first bond
6 years from the date of issuance
and an equal amount payable eacl
year thereafter for "a years. would
cost the county at the end of the 81
years $665, ,006, or difference, a
compared with the sinking-fun
method, of $SO,702 If four per cen
could be realized on the sinking fun
instead Of 8 per cent, the saving 70
the deferred serial plan over tn
sinking fund plan would be $47,21e
'Lauderdale County, Miss, whic
issued 100000 of and 51s DC
cent bonds, adopted the deferred sci
ial-bond method, with the first pa,
ment coming IL years from the dat
Of issue and the last payment 2
years. If the county had issued til
bonds on the 5-25-year basis tn
cost would have been $906,S75, 9
compared with the cost on the bas
adopted of $972,232, or a different
of $65,367."
Even in the case of small issu
the advantage of the serial plan
. illustrated in Dinwiddie county, v
/, This county issued s105,0O0 of
: and per cent bonds, payable in 3
| years, but the bonds are called aft,
20 years. Assuming that they W