Deck 11: Public Finance

Question 1

Most federal expenditures in Texas go to education and health and human services. However, in order to receive these funds, Texas must

A) allow the federal government to manage these programs.
B) coordinate efforts with neighboring states to achieve economies of scale.
C) implement progressive taxes in order to generate more revenue.
D) spend state money in these areas first.

Answer 1

D

Question 2

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 2

C

Question 3

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.

Answer 3

A

Question 4

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 5

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 6

Non-dedicated funds

A) can be used for any purpose.
B) can only be used for specific purposes.
C) are exempt from the pay-as-you-go requirement.
D) are provided by the federal government to the state.

Question 7

Due to the structure of the budget and the constitutional requirement to balance the budget,

A) legislators are given a great amount of flexibility in terms of the budgeting process.
B) legislators have only a few choices in terms of the budgeting process.
C) the budget is easy to forecast each session.
D) legislators generally raise taxes frequently to be able to increase the services offered by the state.

Question 8

The ________ budget is 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 9

What is the most important single tax financing Texas government?

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

Question 10

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 11

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"

Question 12

Texas ranks _________ in terms of state spending per capita, and it ranks _________ in terms of how much money it gets from the federal government per capita.

A) low; high
B) in the middle; in the middle
C) high; low
D) low; in the middle

Question 13

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 is impossible to run a budget surplus.
D) It allows the Highway Trust Fund to be used for education during economic recessions.

Question 14

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 15

When thinking about the system of public financing through these various budgets and funds, it is important to remember that

A) personal income taxes are the largest source of funding for the state.
B) the legislature does not have direct control of most of the money in the state budget.
C) the legislature has a good amount of flexibility in terms of how money in the different funds can be spent.
D) federal expenditures are determined by the state legislature.

Question 16

________ is a non-dedicated revenue account and is the state's primary operating fund.

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

Question 17

In Texas, the state and local governments can both levy sales taxes. These general state and local sales taxes can combine to reach a rate of _________ percent.

A) 8.25
B) 7.15
C) 9.50
D) 6.25

Question 18

The Available School Fund, the State Instructional Materials Fund, and the Foundation School Fund are parts of which category of the Texas budget?

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

Question 19

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 20

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 21

Compared to other states, Texas tends to spend a relatively small amount of money on programs that are jointly funded by the state and federal governments. Because of this,

A) Texas is ineligible for any matching funds because they are distributed only to the largest contributors.
B) the amount of money that Texas receives in matching funds and grants from the federal government is relatively low as compared to other states.
C) Texas receives a higher than average amount of money from the federal government in grants and matching funds compared to other states.
D) Texas shares a pool of funds with other states that are designated as "low-level" contributors.

Question 22

If there is a budget deficit during the biennium, money can be used from the Economic Stabilization Fund

A) at the request of the comptroller of public accounts and with the approval of the governor.
B) only once every ten years.
C) with the approval of three-fifths of the members of both the Texas House and Texas Senate.
D) with the approval of the state treasurer and the governor.

Question 23

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 24

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 25

A consequence of Article 3, Section 49a of the Texas Constitution, also known as the pay-as-you-go limit, is that

A) the dedicated funds are mandated in the constitution and cannot be altered.
B) there is a specific margin of error allowed in the budgeting process.
C) the plural executive has a significant influence in the budgeting process.
D) since taxes are paid into the state on a yearly basis, the legislature is able to set an annual budget.

Question 26

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 27

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 toward health care.
C) a federal budget cycle that complicates the state budgeting process.
D) the unpredictability of natural disaster funding.

Question 28

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 29

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 30

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 31

When you pay your motor vehicle registration fees, the money goes into which fund?

A) User Fee Fund
B) Department of Motor Vehicles Fund
C) Road Maintenance Fund
D) State Highway Fund

Question 32

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 33

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 34

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 35

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 36

Which of the following made it unlikely that Texas will enact a personal income tax in the near future?

A) The Texas Constitution was amended in the 1990s to require that the voters approve of the creation of a state income tax, and that any money generated from it be used to support public education.
B) The Texas Constitution explicitly prohibits a personal income tax, and does not include any provision for creating a personal income tax.
C) The Texas Supreme Court ruled that the personal income tax that had been in place previously violated the Texas Constitution. Once a law has been declared unconstitutional by the Texas Supreme Court, it cannot be reintroduced.
D) The creation of any new forms of revenue, including a personal income tax, would require the support of three-fourths of both chambers of the legislature. In the current partisan polarized environment, it is nearly impossible to reach this threshold.

Question 37

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 38

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 39

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

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

Question 40

Insurance occupation taxes are levied on

A) insurance premiums.
B) the cost of insurance licensing exams.
C) the salaries of insurance brokers.
D) insurance benefits paid to claimants.

Question 41

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

Question 42

The Texas Comptroller's Office is predicting declining receipts in the tobacco settlement account due to fewer people purchasing cigarettes.

Question 43

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

Question 44

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 45

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

Question 46

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

Question 47

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 48

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 49

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

Question 50

What happens if money needs to be transferred from one agency to another and the legislature is not in session to authorize this transfer?

A) The governor can propose the transfer and the LBB can approve the proposal.
B) The governor has to call a special session of the legislature to solve this problem.
C) The agency receiving the money will have the funds debited from its budget in the next state budget, and the agency giving the money will have the funds credited to its budget in the next state budget.
D) The comptroller of public accounts can authorize the transfer.

Question 51

The amount of money a state receives in federal matching funds is based on the amount a state spends on a particular program.

Question 52

According to Texas Constitution (Article 3, Section 51a), Texas cannot spend more than _________ of the state budget in any two-year period to help needy dependent children or their caretakers.

A) 1 percent
B) 5 percent
C) 15 percent
D) 10 percent

Question 53

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

Question 54

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

Question 55

While the Texas Constitution does require that the state maintains a balanced budget, the state is allowed to carry debt as long as the debt service payments

A) are approved by the comptroller, governor, and LBB.
B) are not more than 5 percent of the state's revenue.
C) are automatically paid first to ensure that the state does not default.
D) are paid from a distinct fund kept separate from monies needed for essential functions.

Question 56

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

Question 57

Oil severance tax is levied after the oil is refined into motor vehicle fuel.

Question 58

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

Question 59

In 1978, the Texas Constitution was amended (Article 8, Section 22), so that if the economy of the state shrinks,

A) appropriations can stay the same, as long as the budget balances.
B) appropriations have to shrink as well.
C) appropriations have to increase to stimulate the economy.
D) the comptroller and the governor have the sole authority to decide how to deal with this kind of economic issue.

Question 60

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 61

Discuss the major sources of state revenue in Texas and the major categories of state spending. How does Texas compare to other states in terms of spending in these areas?

Question 62

In the first stage of the budgetary process, the governor's office develops a draft budget based on requests from state agencies.

Question 63

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

Question 64

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 65

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 66

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

Question 67

There is no mechanism available under the current budgetary system in Texas to shift monies between agencies or programs when the legislature is not in session.

Question 68

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

Question 69

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

Question 70

How does the Texas Constitution shape the budget? What budgetary requirements or restrictions are found in the Texas Constitution? Do these restrictions help or hurt Texas in today's competitive business environment? Are there any problems with these restrictions for a rapidly growing state?

Question 71

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

Question 72

The state auditor's office is responsible for making sure that agencies are in compliance with their budgets.

Question 73

Article 8 (Section 22) of the Texas Constitution specifies that the growth in appropriations cannot be more than the growth of the state's economy.

Question 74

All colleges and universities in Texas have access to monies through the Higher Education Fund.