Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-11
100000 BONDS
SOUGHT IN COUNTY
Montgomery Civic Federation
Committee Asks Action
in Assembly.
BY WILLIAM 8. TARVER.
Star Correspondent Of The star.

BETHESDA. Md, January 10.-Au-
thorization by the Maryland General
Assembly of bond issues for Montgom-
cry County totaling 100000, an in
crease of 1014 cents in the county tax
rate and the adoption Of certain
Standards of safety" to be observed in
the issuance Of bonds, were the three
major recommendations to the Mont
gomery County Civic Federation by its
Committee on Public Finance and budg-
ct upon which 1t will be called upon
to act Monday night.
The committee report vetoes the sug-
gestion put forward in q resolution re-
Gently proposed by George H. Lamar
of Rockville, that all bond issues recon-
mended by the federation be submitted
to a popular referendum and that all
county bond authorization acts specify
each project TOR which the funds would
be used and the bond authorization for
each project.
FavOrabIy Reported.
The third portion Of the Lamar reso-
luton, which calls for adoption of q
code of safety In bond issues, Is re-
ported favorably and such code Is
presented by the committee to the fed
GRAFTON.
The legislative report If adopted
would constitute the financial recon-
mendations Of the federation to the
General Assembly and carries the
weight of the 36 constituent organiza-
lions of the federation, which are dis
tributed through the length and breadth
Of Montgomery County.
The bylaws of the federation make it
the duty Of the Finance Committee to
prepare a budget prior to the biennial
session of the Legislature, setting forth
the total estimated cost Of all public
improvements or projects Endorsed by
the federation and the amount Of funds
available and advisable to be made
available within the period covered by
the budget"
The $4,000, 900 bond issue urged, sup
plemented by 100000 from receipts of
the State gas tax and Federal road aid
funds, would finance road. and school
construction and refinance certain exist
ing Indebtedness. The federation has
recommended a road program calling
for the expenditure of 81, acc, 900 and a
school program, which would require
$550,000. In addition, $20o. 900 Is owing
on the court house, $50, 900 on the Be-
thesda and Silver Spring County Build
ings and $4,000 on schools, the report
states.
The report analyes the present and
probable future financial situation Of
the county, makes recommendations
which 1t deems to constitute sound pub
lie finance and then justif1es these
recommendations by application Of the
standards Of safety set out In its re-
port on the Lamar resolution.
Substitute Resolution.
These standards are contained IN a
substitute resolution proposed in place
Of the resolution introduced by Mr.. La
mar The committee suggests that the
federation adopt the policy Of observing
the following propositions in connection
with It's recommendations upon pending
and future bond issues:
Il. Bonds should be restricted to the
financing Of needed permanent public
improvements.
%. Bonds should mature seriaIly
within the probable life Of the improve
mentS for which bonds are issued: an5
turtty schedule of outstanding bonds
payments upon principle should be made
In substantially equal amounts each
year during the term Of the bonds.
g. Under present economical and
financial conditions, the aggregate
amounts OF bonds outstanding at any
one time should not exceed approx
-nSoelJ ~ pei CenC OF the aSSeSSaDle
Value OF the county ut that time"
Safety Requirements Considered.
In formulating the safety REQUIRE
ments, the committee gave consfdera-
ton to the following sources of infor-
nation:
/. The materials presented orally and
In writing by Mr.. Lamar.
2. The report December 1, 1880, of the
Munlclpal Securities Committee Of the
investment Bankers Association of
America.
9; The information and advice of the
following experts on municipal securi-
tleS: Representative Willis g. Hawley of
oregon, chairman Of the WAYS and
Means Committee of the House of Rep
resentativeS, and for more than 80 years
engaged in the purchase of municipal
securities for investment purposes in his
state; William Rumbaugh. manager of
the trading division Of the Continental
Illinois Safe Deposit Co., and formerly
expert Of the Federal Reserve Board on
municipal securities. and William
Brown, municipal securities expert of
Mackubin- Goodrich Co., Q large Balti-
more investment house.
In setting the limit Of outstanding
bonds at 10 per cent Of the County's as
sesSable value, the committee concludes
that the contingent liability of the
county upon Warrington Suburban
Sanitary Commission bonds Is no sub
stantial factor In ascertaining the
proper ratio Of the bonded Indebtedness
to the aSsessable basis"
Mandatory Referendum Condemned.
The proposal for q mandatory refer
endum on bond issues was condemned
as contrary to the provision in the
Maryland Constitution for q referendum
on any legislative act II q petition is
signed by 10 per cent Of the registered
voters of the county.
Concerning the portion Of the Lamar
resolution seeking specification in bond
authorization bills for individual prof.
ectS, the report holds that the proposal
was rejected by the federation, when
1t voted against q similar proposition
put forward by Mr.. Lamar as an
amendment to the recently approved
report of the Committee on Schools.
In its analysis Of the present and
future financial situation Of the county,
the committee uses 81 ~ on each 500
Of assessed value as the average 1880
tax rate. This includes receipts from
special districts and tax areas.
The income from this rate plus the
proposed increase of 10k cents, it Is
stated, would more than pay interest on
the $2,000,000 issue, existing bond COM
lliOulChOo dA1O 4OCO UuO8CI CApCUCutuIGSs
leaving surplus which would provide
funds for future increase expenditures
in operating the county government and
for payments of principal and interest
on new bond issues in the future. In
addition the surplus would permit the
payment in 1888 and 1884 Of SIS. 900 on
the principal of the proposed bond is
sue. Figures furnislne donly include 1884.
The total available surplus for 1881
with the 100000 bond issue and the
increased tax rate in effect, would be
SIS, $50; in 1882. $66,250; in 1888, $685.