Deck 11: Public Finance

Question 1

A ________ is a tax on the market value of oil produced in the state.

A) general sales tax
B) selective sales tax
C) severance tax
D) hidden tax

Answer 1

C

Question 2

In 2003,state political leaders found themselves staring at a $10 billion shortfall in the upcoming budget period.One way to close the budget gap without raising taxes was

A) to cut higher education funding.
B) to allow universities the option to approve a four-year fixed tuition program.
C) to allocate monies to UT Austin from the state's Permanent University Fund.
D) to allocate monies to other Texas schools from the Available University Fund.

Answer 2

A

Question 3

Texas has a reputation of being a ________ state.

A) "low service, high tax"
B) "low service, low tax"
C) "no services, low tax"
D) "high service, high tax"

Answer 3

B

Question 4

Texas spending on a per capita basis is

A) about even with the national average.
B) much higher than the national average.
C) much lower than the national average.
D) among the highest, particularly in education.

Question 5

________ is a nondedicated revenue account and is the state's primary operating fund.

A) General Revenues Funds budget
B) General Revenue-Dedicated Funds budget
C) Federal Funds budget
D) Other Funds budget

Question 6

Federal funds appropriated in Texas generally are

A) widely disbursed across numerous state agencies.
B) concentrated in one agency.
C) concentrated in a few state agencies.
D) determined at each annual legislative session.

Question 7

What determines the amount of tax revenue generated from oil and natural gas produced in Texas?

A) the minimum wage and unemployment rate
B) market price and the amount produced
C) federal regulations and excise taxes imposed by the federal government
D) pipeline construction and environmental issues

Question 8

Which important fact(s)must be noted about this complicated system of public financing through these various budgets?

A) The state budget involves huge amounts of money.
B) Much of the money lies outside the direct control of the legislature.
C) Federal expenditures have a very important role in shaping the overall direction of the state budget.
D) All of these are correct.

Question 9

There is a high sales tax in Texas of ________ percent.

A) 8.25
B) 6.15
C) 8.75
D) 6.25

Question 10

In 2012,Texas ranked ________ when compared to other states on per capita federal dollars flowing into the state.

A) low
B) high
C) first
D) last

Question 11

Which factor(s)related to public finance will work against a return to highly regulated tuition and fees?

A) State political leaders want costs held down, but few want to return all decision making about tuition back to the legislature.
B) Most political leaders recognized that if Texas wants to build high-quality universities, someone has to pay for them.
C) The legislature has been unwilling to allocate more general revenue monies directly to fund higher education, even in an era of rapidly escalated costs in the industry.
D) All of these are correct.

Question 12

Given the budget structure and constitutional limitations on spending and taxing,legislators seeking to balance the budget are left with

A) many choices as to how to balance the budget.
B) few choices as to how to balance the budget.
C) only one choice as to how to balance the budget.
D) no other option than to borrow heavily, thereby increasing state debt.

Question 13

Why must the Texas legislature maintain a balanced budget?

A) It is required by the U.S. Constitution.
B) It is required by the Texas Constitution.
C) Each legislative session decides to balance or not balance the state budget.
D) The Texas Office of the Comptroller writes the state budget.

Question 14

Prior to 2003,tuition rates for public colleges and universities in Texas tended to be

A) slightly above the national average.
B) slightly below the national average.
C) much higher than the national average, because Texas has no state income tax.
D) low compared to other states.

Question 15

What is the most important single tax financing Texas government?

A) income
B) sales
C) property
D) gasoline

Question 16

Which statement about the Texas budget is true?

A) It covers a two-year period.
B) It can include deficit financing from some government operations.
C) It uses lottery proceeds to reduce deficits.
D) It allows the Highway Trust Fund to be used for education during economic recessions.

Question 17

The ________ budget is one comprised of funds for dedicated revenues that target money for specific purposes.

A) General Revenues Fund
B) General Revenue-Dedicated Funds
C) Federal Funds
D) Rainy Day Funds

Question 18

Federal money is an important part of the Texas budget,but monies that Texas receives from the federal government

A) often come with strings attached.
B) are usually categorical grants with no federal guidelines or mandates whatsoever.
C) are too insignificant to be included in the state budgetary process.
D) are usually not received in time to affect the budget process.

Question 19

Prior to 2003,tuition for public colleges and universities in Texas was set by the

A) Board of Education.
B) state Department of Education.
C) governor's Department of Education.
D) state legislature.

Question 20

In a comparison of the 15 most populous states,where did Texas rank in the amount of revenue raised per $1,000 of personal income?

A) It was the median.
B) highest
C) near the lowest
D) near the highest

Question 21

Which of the following categories of taxes contributed most to the Texas treasury?

A) oil and natural gas production
B) franchise
C) motor vehicle sales and rental
D) sales

Question 22

Which statement regarding state-federal spending in Texas is true?

A) Texas spends more on state-federal programs than most states do.
B) Texas spends less on state-federal programs than most states do.
C) Texas spends more than any other state for state-federal programs because Texans favor massive public welfare programs.
D) State-federal spending in Texas has been historically high relative to that of the rest of the states.

Question 23

Which of the following is a consumer tax?

A) sales tax
B) tobacco tax
C) motor vehicle sales tax
D) All of these are correct.

Question 24

Which fund is a major dedicated fund?

A) Higher Education Research Fund
B) Permanent Parks Fund
C) Permanent University Fund
D) Public School Endowment Fund

Question 25

The State Highway Fund comes from what source(s)?

A) motor vehicle registration fees
B) the federal highway fund
C) sales tax on motor lubricants
D) All of these are correct.

Question 26

In addition to federal monies,which two other sources in recent years have had a major impact on monies flowing into the state budget?

A) the alcoholic beverage tax and utility tax
B) the inheritance tax and hotel tax
C) the cigarette and tobacco taxes and motor fuel tax
D) the state lottery and the settlement the state reached with tobacco companies

Question 27

Federal matching funds are

A) state monies going to support the federal government in its efforts to reduce the deficit.
B) monies going to a state based on a state spending for a program.
C) always distributed to states without any strings attached.
D) only awarded to states that have an income tax.

Question 28

Texas will never have a personal income tax in the future because

A) Bullock proposed a constitutional amendment that effectively gave the electorate a veto over any proposal for an income tax.
B) Bullock vetoed a bill proposing a state income tax.
C) former governor John Connally and then-governor Ann Richards were against the idea.
D) county commissioners must approve the personal income tax amendment, which is unlikely.

Question 29

What is the argument commonly used by supporters of a state income tax?

A) It will probably be quite regressive.
B) It is a fairer but highly unreliable source of revenue.
C) It makes Texas more attractive to businesses that are considering relocating from out of state.
D) It is a fair and more reliable source of revenue.

Question 30

The main purpose of the Permanent School Fund is to

A) buy textbooks for Texas children.
B) fund primary and secondary schools in the state.
C) fund universities and community colleges in the state.
D) fund the two main universities in Texas: the University of Texas and Texas A&M.

Question 31

Next to revenue generated by state taxes,the second-largest source of state revenue comes from

A) the Texas lottery.
B) gasoline taxes.
C) the federal government.
D) borrowing.

Question 32

Authorized by voters in 1991,the Texas state lottery generates a sizeable sum for the state budget.Which of the following statements regarding the Texas lottery is true?

A) The lottery is played almost entirely by poor people.
B) The lottery is played almost entirely by the wealthy.
C) The lottery is played by large numbers of people from all social classes.
D) All Texans unanimously support the lottery.

Question 33

The National Research University Fund was established through a constitutional amendment to provide a source of funding for

A) community colleges in poorly performing districts.
B) community colleges in primarily minority districts.
C) independent school districts that sought to reduce the dropout rate.
D) universities seeking to achieve national prominence as research institutions.

Question 34

Who pays the greatest portion of their income in property taxes?

A) business owners
B) wealthy homeowners and renters
C) poor homeowners and renters
D) renters

Question 35

The Permanent School Fund distributes money to school districts across the state based on what two factors?

A) the number of schools in a district and student attendance
B) student attendance and guaranteed bonds issued by local school boards
C) the number of teachers and test scores
D) teacher availability to student ratio and test scores

Question 36

The ________ is a dedicated fund established by the constitution for the support of public education in the state.

A) Permanent University Fund
B) Available School Fund
C) National Research University Fund
D) state lottery

Question 37

Overall,the tax system in Texas is generally considered to be regressive,which means that

A) the tax burden consumes a greater percentage of income received by lower-income individuals.
B) the tax burden consumes a greater percentage of the income earned by higher-income individuals.
C) everybody pays the same percent of his or her income in taxes.
D) the more income one has, the larger the percentage of it that goes to pay taxes.

Question 38

The Permanent School Fund is managed primarily by what entity?

A) the governor
B) the Texas Higher Coordinating Board
C) the State Board of Education
D) a Blue Ribbon Committee on Education

Question 39

One significant component of the budget process that is relatively unique to Texas is

A) the constitutional mandate that Texas legislators write a budget every two years.
B) the constitutional mandate that Texas legislators allocate at least 50 percent of the budget towards health care.
C) a federal budget cycle that complicates the state budgeting process.
D) the unpredictability of natural disaster funding.

Question 40

The Economic Stabilization Fund is also known as the

A) Rainy Day Fund.
B) general revenue fund.
C) pay-as-you-go fund.
D) Enterprise Fund.

Question 41

Texas's 6.25 percent sales tax is the highest in the nation.

Question 42

The Legislative Budget Board is chaired by

A) the comptroller of public accounts.
B) the governor.
C) the lieutenant governor.
D) the land commissioner.

Question 43

Which of the following statements is true?

A) During the 2011 legislative session, it became apparent that the booming state economy had dramatically increased state revenues.
B) The effects of the Great Recession did not reach Texas, as the state enjoyed surplus revenues.
C) The legislative session in 2011 was particularly difficult because the Great Recession had significantly reduced state revenue.
D) The Texas legislature did not meet in 2011.

Question 44

According to the text,just as the economy began to improve and state revenues started increasing,a new threat arose to threaten the newly balanced budget.It was the

A) rising interest rates that increased the cost of borrowing.
B) increasing health care costs due to recent efforts to reform the health care system.
C) underfunded state pension system.
D) rising salaries of teachers.

Question 45

Which of the following is at the heart of the budget process in Texas?

A) the Permanent University Fund
B) the Texas Higher Education Coordination Board
C) the Texas comptroller
D) the Texas Education Commission

Question 46

Nationally,what two factors caused the bubble in the real estate market?

A) high interest rates and high foreclosures
B) low interest rates and high credit standards
C) low interest rates and loose credit standards
D) tight credit standards and low interest rates

Question 47

Texas is known as a high tax state; because of this,it is a good place to do business.

Question 48

Texas is one of a handful of states that does NOT have a state income tax.

Question 49

The number of workers employed by Texas is smaller than that of many other states.

Question 50

The state legislature can impose any personal income tax without requiring voter approval.

Question 51

From an overall standpoint,which statement is true?

A) The Texas economy is closely tied to the national economy.
B) The Texas economy is largely immune to the national economy.
C) The Texas economy is much larger than the national economy.
D) The Texas budget cycle effectively insulates the state economy from the rest of the world.

Question 52

Texas maintains a balanced budget because the state constitution requires it.

Question 53

The purpose of the Biennial Revenue Estimate is to provide

A) a detailed forecast of total revenues that the state is expected to take in over the next biennium.
B) a detailed forecast of expenditures the state expects to be obligated for in the two-year budget cycle.
C) a detailed forecast of the estimated federal funds the state can expect to receive during the two-year budget cycle.
D) the governor a detailed estimate of the likelihood of a balanced budget during the two-year budget cycle.

Question 54

When compared to the rest of the nation,the real estate collapse in Texas was

A) more severe.
B) less severe.
C) remedied by low property tax rates.
D) about the same as the national trend.

Question 55

In theory,Texas has a dual-budget system,meaning the budget authority is shared by the governor and the legislature; however,in practice,the primary player(s)in the budget is/are

A) the governor.
B) the legislature.
C) the taxpayers.
D) special interests.

Question 56

In addition to the state sales tax of 6.25 percent,county,city,and metropolitan transit authorities are allowed to impose an additional 2 percent sales tax.

Question 57

It is through what process that the legislature legally authorizes a government agency or body to spend up to a particular amount of money?

A) state spending
B) revenue bonds
C) appropriations
D) general obligation bonds

Question 58

The bulk of federal funds expenditures is in two areas: health and human services and education.

Question 59

To address the budget shortfall in the 2012-2013 budget,the most common tactic used by the legislature was

A) raising tax rates.
B) borrowing from the federal government.
C) spending cuts.
D) a newly implemented income tax.

Question 60

Much of the money in the state budget lies outside the direct control of the legislature.

Question 61

With a progressive income tax,people with lower income pay a lower tax rate than people with higher income.

Question 62

Article 8 of the Texas Constitution specifies that the growth in appropriations cannot be more than the growth of the state's economy.

Question 63

Under Texas's budgetary system,there is NO power to shift monies between agencies or programs when the legislature in NOT in session.

Question 64

A 2015 study found that the median monthly dollar amount spent on any lottery game was $100.

Question 65

The Legislative Budget Board's draft budget,NOT the governor's budget,is the one voted upon by the legislature.

Question 66

How was Texas able to delay the full impact of the recession on the Texas budget? What factors will continue to dominate public finance over the next biennium?

Question 67

Discuss the major sources of state revenue in Texas and the major categories of state spending.

Question 68

In West Orange-Cove Consolidated ISD v.Neely,the Texas Supreme Court ruled that school districts had adequate discretion to set tax rates within their jurisdictions.

Question 69

Poor homeowners and renters generally pay more of their income in property tax than do the wealthy.

Question 70

It is common for the governor to call a special session of the legislature to deal with budget issues.

Question 71

The Permanent University Trust Fund contributes to the support of all institutions in the University of Texas and Texas A&M university systems.

Question 72

What happened when tuition and fees for Texas colleges were no longer controlled or mandated by the state legislature? Discuss the background conditions that led to this decision and how this affected state funding for higher education.

Question 73

The Legislative Budget Board plays an important role in the budget process in Texas.

Question 74

The Rainy Day Fund is more properly known as the National Research University Fund.

Question 75

Identify four types of taxes in Texas and the regressive aspects of the Texas tax system.

Question 76

Identify and discuss the major players in the budget process in Texas (offices or entities).

Question 77

Explain the strengths and weaknesses of the budgetary process in Texas.

Question 78

Because the budget process in Texas operates on a two-year cycle,Texas legislators have adequate time to gather information,carefully analyze it,and craft a detailed and accurate state budget.

Question 79

The Texas economy is tied to the booms and busts of the national economy.