Public Finance in Texas (ch. 11) – Flashcards
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All Funds budget:
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Budget that aggregates all monies flowing into the state treasury and all state spending
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Regressive tax:
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Type of tax where the tax burden falls more heavily on lower-income individuals
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Progressive tax:
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Type of tax where the tax burden falls more heavily on upper-income individuals
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Matching funds:
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Federal monies going to a state based on state spending for a program
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General Revenue Fund:
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The state's primary operating fund
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Permanent School Fund (PSF):
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Fund created in 1854 that provides monies for primary and secondary schools
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Available School Fund (ASF):
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Dedicated fund established by the constitution for the support of public education in the state
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State Highway Fund:
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Fund that supports the construction. Maintenance, and policing of roadways and acquires rights of way funded through a variety of taxes such as motor vehicle registration fees, the federal highway fund, and the sales tax on motor lubricants
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Economic Stabilization Fund (ESF):
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Fund established by constitutional amendment in 1988 to provide funds for the state during times of financial stress commonly known as the Rainy Day Fund
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Permanent University Trust Fund (PUF):
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Fund established in 1876 and funded from the proceeds from land owned by the state-monies go to various universities in the University of Texas (UT) and Texas A&M systems
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Higher Education Fund (HEF):
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State higher education fund for universities not having access to PUF monies
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National Research University Fund (NRUF):
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Fund established in 2009 to provide funding to universities seeking to achieve national prominence as research institutions
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Article 3 Section 49a (Pay-as-You-Go Limit):
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Portion of the Texas Constitution that requires the state to maintain a balanced budget
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Appropriations:
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Authorization by the legislature to a government agency or body to spend up to a particular amount of money
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Debt service:
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Money spent by the state to pay off debt; includes interest and principal payments
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The Texas Constitution requires that the Texas budget must be-
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Balanced.
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Federal expenditures primarily affect the state budget in which two areas?
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Health-human services and education
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Texas has the reputation for being-
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A low-service, low-tax state
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The proportion of state employees to the population in Texas is-
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Far below the national average
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One major revenue source for Texas is the sales tax, which is-
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6.25% for state government and 2 % for local government.
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A Texas personal income tax-
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Would have to be approved by the voters, and the revenues from it would have to support public education.
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The Rainy Day Fund-
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Was designed to provide funding for the state during times of financial distress.
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The National Research University Fund-
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Funds Texas universities seeking national prominence as research institutions.
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Which of the following is not a constitutional constraint on the budgetary process in Texas?
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The annual budget
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What is meant by "the budget-execution authority"?
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The legislature's power to establish rules for the expenditure of funds by state agencies
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Who is the chief planning officer of the state of Texas?
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The governor
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The principal job of the Legislative Budget Board is-
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To recommend appropriations for all agencies of state government
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Which factors lie behind the budget crisis of 2011?
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The Great Recession and property tax reform
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Which solution was put into place to address the bud-get crisis of 2011?
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Speeding up the payments of various taxes on alcohol and motor fuels
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Prior to 2003, tuition for public colleges and universities in Texas was set by the
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state legislature.
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Prior to 2003, tuition rates for public colleges and universities in Texas tended to be
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low compared to other states.
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Following a legislative decision in 2003 to reduce state funding to higher education, which source of university revenue began to increase most rapidly?
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student tuition and fees
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Why must the Texas legislature maintain a balanced budget?
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It is required by the Texas Constitution.
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The ___ budget is one composed of funds for dedicated revenues that target money for specific purposes.
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General Revenue-Dedicated Funds
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Given the budget structure and constitutional limitations upon spending and taxing, legislators seeking to balance the budget are left with
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few choices as to how to balance the budget.
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Federal money is an important part of the Texas budget, but monies that Texas receives from the deferral government
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often come with strings attached
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Federal funds appropriated in Texas generally are
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concentrated in a few state agencies.
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Texas seeks to maintain a favorable environment for
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health and human services
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TX spending on per capita basis is:
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Much lower than the national average
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in 2012, TX ranked ____ when compared to other states on the per capital federal dollars flowing into the stat
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high
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There is a high sales tax in TX of ___%
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6.25
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What is the single largest tax revenue for the state of TX?
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Sales tax
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What determines the amount of tax revenue generated from oil and natural gas produced in TX?
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market price and the amount produced
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The revenues flowing from the motor fuels tax are dedicated to what 4 areas?
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1. maintenance. 2.policing of public roads 3.public education 4.construction
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Overall, the tax system in Texas is generally considered to be regressive, which means that
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the tax burden consumes a greater percentage of income received by lower-income individuals.
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Who pays the greatest portion of their income in property taxes?
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Poor homeowners and renters
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The following 4 are generally considered to be examples of regressive taxes or fees?
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1. sales taxes 2. property taxes 3. auto registration and inspection fees 4. excise taxes on alcohol and cigarettes
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What is the argument commonly used by supporters of a state income tax?
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It is a fairer and more reliable source of revenue.
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If Texas instituted a progressive income tax,
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low-income Texans would pay a lower tax rate than wealthy Texans.
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Texas will never have a personal income tax in the future because
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Bullock proposed a constitutional amendment that effectively gave the electorate a veto over any proposal for an income tax.
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Next to revenue generated by state taxes, the second-largest source of state revenue comes from
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the federal government.
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In addition to federal monies, which two other sources in recent years have had a major impact on monies flowing into the state budget?
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the state lottery and the settlement the state reached with tobacco companies
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Federal matching funds are
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awarded to states that agree to fund a federal program on behalf of their own citizens.
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The Permanent School Fund distributes money to school districts across the state based on what two factors?
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student attendance and guaranteed bonds issued by local school boards
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The Economic Stabilization Fund is also known as the
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Rainy Day Fund
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The Permanent University Fund was established in 1876 with a land grant of 1 million acres. It contributes to the support of
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the University of Texas and Texas A&M university systems
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For universities to be eligible for the National Research University Fund they must meet at least all of the following:
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1. Maintain an endowment of at least $400 Mil in the two preceding academic years. 2. Produce 200 Ph.D. degrees during the previous two years. 3. Have a freshman class of high academic achievement. 4. Have a demonstrable excellence in graduate education.
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One significant component of the budget process that is relatively unique to Texas is
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the constitutional mandate that Texas legislators write a budget every two years.
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Which of the following is at the heart of the budget process in Texas?
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the Texas comptroller
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The Texas Constitution specifies that state payments for assistance to needy children and their caretakers shall NOT exceed ___ percent of the state's budget in any biennium.
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1%
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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?
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the legislature
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The following four individuals are key players in the budgetary process:
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1. the comptroller of public accounts 2. the governor 3. the lieutenant governor 4. the chairman of the House Committee on Ways and Means
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The purpose of the Biennial Revenue Estimate is to provide
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a detailed forecast of total revenues that the state is expected to take in.
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Nationally, what two factors caused the bubble in the real estate market?
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low interest rates and loose credit standards
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When compared to the rest of the nation, the real estate collapse in Texas was
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less severe
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The Texas legislature increased ____ to help compensate for lower property tax revenues in the 2012-2013 budget cycle.
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state corporate franchise taxes and cigarette taxes
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What action forced the legislature to bring the 2012-2013 state budget into balance?
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A special session of the Texas legislature voted for a balanced budget.
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To address the budget shortfall in the 2012-2013 budget, the most common tactic used by the legislature was
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spending cuts.
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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
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increasing health care costs due to recent efforts to reform the health care system.
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