The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1925-01-23

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the payment of these obligations as
planned can be insured only by set
ting aside every year large part of
the motor vehicle tax receipts, or vir-
tually all the gasoline taxes that may
be collected This will take money
which otherwise would build road i'm
provements. Without additional in
come, advances of working capital
through bond issues or other refund
ing authorization, the highway de-
partment will be compelled to limit
trunk route work to maintenance or
upkeep.
In this situation, the most effective
remedy would be provided through
adoption of the recommendation for
first state issues of state trunk high
way bonds. These issues would be in
the nature of refunding bond authori-
cations. They will supply the tenn
porary advances of working capital
needed to put the county reimburse
ments on proper basis, extending
maturities over reasonable period
and at the same time releasing cash
balances for immediate improvements
and generally relieving the present
stringency.
Conversion of gasoline tax receipts
into the sinking fund direct, as stat
ed, would afford measure of relief.
But the bond plan in addition prom
ises to prove general and perma-
nent cure.
With highway demands fast increas-
ing under growing traffic and past
progress due in big measure to REIN
bursement bond funds, careful inves-
tigation has failed to bring out any
feasible plan which will avoid issues
of highway bonds sooner or later And
the earlier they are authorized, it ap-
pears, the more satisfactory will be
results.
Highway Bonds Misnomer
The proposed first issues of $780,
100000 of state trunk highway bonds
differ materially from the ordinary
bond proposal. Certificates anticipat-
ing motor vehicle tax income, better
than the word bonds" describes the
proposal.
The plan is simply to loan the use
of state credit to Minnesota owners
of more than 100000 motor vehicles
a large, responsible, representative
class of citizens. 1t will be used to
their advantage to secure cash saw
ings and the many other benefits that
come from adequate roads. 1t will
have no effect on general or motor
vehicle taxation 1t purposes only to
obtain biggest returns from given
annual income.
The highway bond plan is much like
the rural credits plan inaugurated
fyun sy1 10 I,af
loans state credit to farmers. Nearly
$40,000,000 of State bonds have been
issued under it and authorization for
$40,000,000 more during the coming
biennium may be recommended. Farm
ers availing themselves of the rural
credits plan pay all expenses. They
profit by lower interest rates and easy
payment privileges. The state only
lends it's credit and administers the
plan.
The highway bond proposal is on
identical lines. Motor vehicle own
ers are bound by the state constitu-
tion to pay all expenses. The bonds
will provide the revolving fund need
ed to extend easy payment privileges
and reduce interest carrying charges
to the automobile and truck owners
Money which otherwise would go for
repairs on vehicles and roads-both
of which are borne by the auto own
ers-will be diverted to more perma-
nent benefits.
The public road system is perhaps
the largest and most successful ex-
ample of public ownership. In the
case of the trunk highways, the citi-
fy.,1 Oxzlxv - h. Sc,
owner When he disposes of his au-
tomobiles, the state highway plan
takes nothing from him AS long as
he owns car his contributions toward
trunk highway funds are to him indi-
vidually profit yielding investment.
Bonds Reduce Net Costs
Road improvements must earn their
cost, else there is no reason for max
ing them. Practical tests, as stated,
show conclusiyely that better high
ways offer most productive invest
ment for public funds. President Cool
idge is committed to that fact. The
federal government continues liberal
aid appropriations to encourage high
way development. All progressive
states are carrying on more and more
A common impression that interest
on bonds increases road costs is en-
tirely false. The contrary is true.
Minnesota loans fundsfat Az per cent
interest and borrows at per cent.
Cash put into roads costs the loss
to the state of Az per cent annual in
terest. Bonds issued for needed high
way improvements will cost the state
only per cent.
To make the situation clearer: If
the state loaned to counties, school
districts and so forth, the $10,500,000
of current highway receipts of 1924, it
would collect more than $450,000 in
terest yearly. If like sum was bor-
rowed on bonds to reimbursement the
working fund, the interest charge
would have been about 100000. The
bond plan would have netted $4,000
saving.
A pay-as-you-build plan of highway
development pyramids benefits from
permanent improvements. Under
identical tax rates, it gives the tax
payer of ten years in the future ten
times as much value for his money as
the taxpayer of the present, and those
of twenty years hence twenty times
as much. The bond plan enables the
state to collect each year of the life
of an improvement an amount repre-
senting fair share of its cost. In no
other manner can the cost be fairly
spread over the years the improve
ment will serve.
Bridges are not built one span a
year or school and court houses one
room year as funds become avail
able from tax leyies. There is no
more reason for building roads few
miles at a time.