Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-11-04
PUBLIC BUSINESS
AS A PRIVATE AFFAIR
City Sinking Fund Commission Persists
in Its Policy Of ignoring Requests
for Information

Municipal Research, to the Sinking FUND
Commissioners challenges the commits
sioners to take the public into their con
tidencc. Their attitude in the past has
been that what they did was none of the
public's business. Here is what Director
Gutenberg wrote:
Ptrui. us To- suggest further that an
open reply to this open letter informing
the public OF the steps taken and the steps
contemplated by your body in this mat
ter will be a highly valuable contribution
TO the effective democracy that the new
charter seeks TO advance,
After reading the letter and comforting
with Mayor Smith, Controller Walton an
uounced that the commissioners would
have nothing to say on the subject.
This has been their consistent attitude
for years. They have made their annual
estimates of the amounts required to
meet the annual needs Of the sinking
fund, but those estimates have been too
large. The taxpayers have been burdened
with charges not properly levied upon
them 1t has been said that these excess
charges have amounted in some years to
as much as ten cents in the tax rate.
In 1916 it was discove. ed that the COM
missioners had accumulated large sur
plus. This was disclosed in its report.
1t was compelled to use that surplus for
the relief of the taxpayers. 1t did so
reluctantly.
Then the commissioners at once
changed the form of their report, 50 that
since then it has been difficult to learn
the exact status of the funds in their
control. Councils in 1917 asked for def
mite information on various matters, but
the commissioners have ignored that re-
quest to the present day and have not
deigned to supply the body to which by
law it is directed to make reports with
the facts which it sought.
There is reason to believe that out of
the payments to the sinking fund in eX-
cess Of the annual requirements there is
now in the hands of the commissioners at
least $4000000. Its existence is said to
have been concealed by bookkeeping
methods and the commissioners are dumb
when they are questioned about it. Their
announced intention to ignore the COM
munication from the Bureau of Municipal
Research is characteristic.
The new charter contains provisions
intended to reform the processes of the
commissioners and ultimately to abolish
the sinking fund entirely. This fund, as
every one knows, is accumulated for the
purpose of paying city bonds as they
mature. The moneys in it are used to
buy the bonds. The money appropriated
by the city TO meet the interest on the
debt is paid over to the commissioners.
They in turn hand it over to the citys
fiscal agent, who distributes it. among
the bondholders, including the Sinking
Fund Commission.
The commission now holds nearly $780,
100000 of city bonds, paid for out of the
tax levy, on which the city continues to
pay interest to itself. Under a proper
system of financing about two-thirds of
this amount could be Cancelled at once,
relieving the city of the interest charges
and easing the tax burdens on every one.
The city is in the condition of a busi-
ness man who has fioated negotiable
notes and finds himself with money with
which to buy them in the open market.
But when the business man buys his note
he tears it up and stops paying interest
on it. The city, however, buys its own
bonds and continues paying interest to
itself on them till their maturity.
The abuses from which the city is now
suffering have grown up under the sink
ing fund system, a system necessary
when long-term bonds are issued. Ger
tain sums have been appropriated each
year to provide money with which to pay
the bonds when they fell due, so that in
ten or fifteen or twenty years the bonds
could be retired without putting an enor-
NOUS sum in the annual budget. The
finance sections of the new charter have
been drafted in accordance with the
theory that serial bonds are better than
long-term bonds.
Now, serial bonds are like installment
mortgages, payable little at time.
For example, if the city wishes to borrow
$50 O00,OO for thirty years, under the
| serial plan it would issue the bonds in
thirty series of 81 900 900 for each series,
| the first of the series to run for one
wear, the second for two years and so on
| until the thirtieth, which would run for
thirty years. An annual appropriation
of 81 100000 year, plus the constantly
decreasing interest charge, would wipe
out the debt by the time the last install
ment fell due and it would save to the
taxpayers a large sum in interest.
The new charter does not directly com
mand this system to be adopted, but its
provisions, for the disposal of the bonds
held by the sinking fund commissioners
are such that it would be so much more
expedient to adopt it than to continue the
present system that reasonable men can,
not we'll refrain from accepting it.
1t would simplify municipal bookkeep,
ing; it would make it impossible to jugglC
with the accounts in way to concea
from the public the real state of affairs
It would make it impossible for the city
to sell to bankers new issue Of bonds
| .,,d tten for fha Cinkin0 Fund Comn,is