- Explain the different types of taxes
- Be familiar with the various revenue sources for Texas
- Explain the budgetary process of Texas
- Explain the budget expenditures of Texas
- Income tax– taxes collected from an individual’s income (There is no state income tax in Texas);
- General sales tax– based on taxes collected from retail prices of items;
- Excise tax– taxes collected on specific products such as tobacco and gasoline;
- Ad valorem tax– taxes based according to the value of the property.
Other Revenue Sources
- Federal grants in aid– these types of funds come from the federal government to aid state or local governments, and sometimes require matching monies from the receiving government and/or are to be used for a specific use.
- Borrowing– The Texas Constitution does allow for the state or local governments to borrow funds through bonds. There are two types of bonds:
- General-obligation bonds: Bonds repaid from taxes, usually approved by taxpayers through vote;
- Revenue bonds: Typically paid through the revenue made from the projects created by the bond i.e. sports facilities, public college dorms.
- Economic Stabilization Fund– The “Rainy Day Fund” is a type of savings account for the state of Texas. Since 1990, any surplus from previous budget cycles, and collections from oil and gas production are deposited in to this account- the Texas Constitution limits the balance of the Rainy Day Fund to no more than 10% of the general revenue deposited during the preceding budget cycle. At the end of fiscal year 2016, Texas’ Rainy Day Fund was approximately $9.7 billion dollars. The Texas Constitution authorizes the Legislature to utilize monies from the Rainy Day Fund for a budget deficit, projected revenue shortfall, or any other purpose they choose.
- “Appropriations for the first two circumstances require approval by three-fifths of the Legislature, while a general-purpose appropriation needs a two-thirds majority for passage. The Legislature has made seven appropriations totaling $10.6 billion from the ESF since its inception, most recently in 2013. All were approved by two-thirds votes. The purposes for these appropriations have included water projects, disaster relief, public education, economic development and health and human services. Only one appropriation—$3.2 billion in 2011, representing 34 percent of the fund balance at that time—was made to cover a budget gap (for fiscal 2011).”
Contributors and Attributions
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