Texas Govt Chapter 11

The "taxable margin" is the lesser value derived from one of four methods of calculation:

(1) 70 percent of total revenue, (2) total revenue minus cost of goods sold, (3) total revenue minus total compensation and benefits, or (4) total revenue minus $1 million.

Strategic plans are developed by each agency. These plans include:

(1) a mission statement, (2) a statement about the goals of the agency, (3) a discussion of the population served by the agency, (4) an explanation of the means that will be used to achieve these goals, and (5) an identification of the measures to be used to assess the agency's success in meeting these goals.

In addition, universities must meet at least four of the following criteria to qualify for the NRUF:

(1) maintain an endowment of at least $400 million 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) be designated as a member of the Association of Research Libraries, have a Phi Beta Kappa Chapter, or be a member of Phi Kappa Phi; (5) have a certain number of tenured faculty who have demonstrated excellence by winning a Nobel Prize or other prestigious fellowships, or have been elected to one of the National Academies; and (6) have a demonstrable excellence in graduate education.

The median monthly dollar amount spent on any lottery game was $________.

12.00

In an effort to fight the recession at the national level, the federal government instituted a surge of deficit spending under the _________________________________ Act passed in February 2009.

American Recovery and Reinvestment

Hotel and Motel tax

This state tax is 6 percent of the hotel and motel occupancy bill paid by the occupant.

Medicaid

a state-federal program providing funds to finance health care delivery to the poor.

Which of the following is not a constitutional constraint on the budgetary process in Texas?

the annual budget

Who is the chief planning officer of the state of Texas?

the governor

What is meant by "the budget-execution authority"?

the legislature's power to establish rules for the expenditure of funds by state agencies

This power to execute the budget is an important one. It has been a tool used by the governor and LBB to cope with the _________________________ in the state budget by ordering state agencies to _______ their expenditures in the middle of a biennium.

unanticipated shortfalls; cut

A budget, according to Webster's Dictionary, is an

"estimate of future financial income and outgo."

The BRE includes other information to assist legislators in the budget process, including:

(1) statements about the anticipated revenue from different sources, (2) an analysis of the economic outlook facing Texas and the nation, and (3) a detailed accounting of the funds in the state treasury

How much money is available to public education through the PSF is determined by the State Board of Education by:

(1) taking into account the average market value of the fund for the preceding 16 fiscal quarters and (2) setting a distribution rate that does not jeopardize the likelihood that the fund can support future students at a similar rate.

Today, Article 16, Section 69 (referring to state agency expenditured funds) means that between legislative sessions, the governor or the LBB may propose:

(1) that an agency stop spending money appropriated to it in the budget, (2) that money be transferred from one agency to another, or (3) that the purpose for an appropriation to a particular agency be changed.

The Legislative Budget Board (LBB) part in the budgetary process includes:

1. adopts a constitutional spending limit 2. prepares a general appropriations bill 3. prepares agency performance reports 4. guides, reviews, and finalizes agency strategic plans 5. prepares fiscal notes regarding costs and impacts of proposed legislation 6. engages in "budget execution actions" in conjunction with the governor by transferring money from one assigned purpose to another purpose or to another agency

The governor and the Governor's Office of Budget, Planning, and Policy (GOBPP) part in the budgetary process includes:

1. develop a strategic plan for the state 2. help to develop agency Legislative Appropriation Requests (LARs) 3. hold LAR hearings, often in conjunction with the legislature 4. deliver a governor's appropriations budget and a general appropriations bill at the beginning of the legislative session 5. exercise a line-item veto after an appropriations bill is passed by the legislature 6. engage in "budget execution actions" in conjunction with the LBB by transferring money from one assigned purpose to another purpose or to another agency

The comptroller of public accounts part in the budgetary process includes:

1. submits a statement regarding the estimated anticipated revenues for the coming biennium 2. certifies that an appropriations bill is in balance with projected state revenues 3. collects state taxes 4. tracks 600 separate revenue and spending funds and makes sure that agencies stay within their budgets.

In 1949 a law was enacted to establish the _______________, whose primary job would be to recommend appropriations for all agencies of state government.

10-member LBB

In 2003 state political leaders found themselves staring at a $___ billion shortfall in the upcoming budget period. Mandated by the state constitution to maintain a ____________ budget, they needed to find new and creative ways to close the budget gap without _____________. One method was to cut higher _____________ funding.

10; balanced; raising taxes; education

In 2012, Texas took in $10,647 per capita from the federal government, ranking it ___th among the states, above the national state average of $8,844

11

In 2011, Texas ranked ___th among the states in terms of property taxes paid per capita, at $1,393.

12

A 2011 study conducted by the Tax Foundation concluded that Texas had the ___th most business-friendly tax system.

13

The legislature can meet for only ______ days in regular session.

140

The Rainy Day Fund is generated by a formula involving the base year of _______. If collections from oil and gas taxes ________ the 1987 base year amount, _____ percent is transferred to the fund. Transfers are made in ______________ by the comptroller.

1987; exceed; 75; February

Article 3, Section 51a, provides that the amount of money the state pays for assistance to or on behalf of needy dependent children and their caretakers shall not exceed ___ percent of the state budget in any biennium. State expenditures on _________ are not included in this spending limit.

1; Medicaid

Most businesses pay a tax rate of ___ percent on their taxable margin, although a lower rate is available to businesses primarily in _______________________.

1; retail or wholesale trade

Together county, city, and metropolitan transit authorities are allowed to impose an additional ___ percent sales tax on top of the 6.25 percent.

2

Costs ranged from $________ per year at Texas A&M at Texarkana to $________ per year at the University of Texas (UT) at Austin. ___________ revenues funded a large portion of the state university's education budget.

2,870; 4,912; General

In 1991, ____ special funds were brought into the General Revenue-Dedicated Funds Account as part of a budget _________________________ package.

200; reform and consolidation

The state of Texas collects a tax of ___ cents per gallon on motor fuels. The federal government collects an additional _____ cents per gallon, but Texans still pay _____ tax on gasoline than residents of many other states.

20; 18.4; less

On a per capita basis, Texas ranks ___th in educational spending, ___th in highway spending, ___th in hospital spending, and ___st in public welfare spending.

27; 44; 25; 41

In 2003, as a trade-off for a ___ percent cut in the higher education budget, the legislature gave the regents of the various state schools the authority to raise _______ to make up the difference.

2; tuition

The oil severance tax is ____ percent of the market value of oil produced in the state. (There is also an ______________ tax of three-sixteenths of one cent per barrel of oil produced in Texas.)

4.6; oil regulation

There are, in fact, _____ funds in the state treasury whose monies are directed to a wide variety of functions.

400

One Texas Legislative Budget Board study found that among the 50 states, Texas ranked ___th on per capita state government expenditures. Texas's spending of $_________ per person was far ________ the U.S. average of $6,433.

46; 4,916; below

Under a 1997 amendment to Article 3, Section 49j, the legislature cannot authorize additional debt if the resulting debt service is greater than ___ percent of the average General Revenue Fund revenue for the three preceding fiscal years (this _________ dedicated spending).

5; excludes

One major revenue source for Texas is the sales tax, which is

6.25 percent for state government and 2 percent for local government.

There is a high sales tax in Texas of ______ percent, the 13th highest in the nation. Combined state and local sales taxes in the state can reach ______ percent.

6.25; 8.25

There is a _______ percent tax on the sales price of all motor vehicles in the state. There is also a 10 percent tax on all ________ vehicles up to 30 days and 6.25 percent thereafter. Newly manufactured _________ are also taxed at 5 percent of 65 percent of the sale price.

6.25; rental; homes

Overall, the average cost of attending a four-year institution in Texas for a year rose 90 percent from $3,864 to $__________. Although this was _________ the national average of $________ per year for an in-state public institution, higher education had become an expensive commodity in Texas.

7,342; below; 8,244

There is a ____ percent tax on the market value of all natural gas produced in the state. As with the oil tax, the tax raised from natural gas depends on the _____ and the __________ produced.

7.5; price; amount

Two other sources in recent years have had a major impact on monies flowing into the state budget:

A state lottery was passed by the state legislature and approved by the voters in 1991, and a second major source of nontax revenue is a result of the settlement the state reached with tobacco companies in January 1998.

A number of specific constitutional provisions constrain the legislature's control of the budget:

Article 3, Section 49a (Pay-as-You-Go Limit), The Welfare Spending Limit, The Limit on the Growth of Certain Appropriations, Budget-Execution Authority,

Under provisions in the state constitution, all surface lease income goes into the ___________________ (AUF), a fund set up to distribute PUF monies. _____________ income and the proceeds from the sale of PUF lands go into PUF and are invested.

Available University Fund; Mineral

While the draft budgets are being prepared, the comptroller's office prepares the ________________________ (BRE). The BRE is a detailed forecast of the total revenue that the state is expected to take in over the next biennium.

Biennial Revenue Estimate

________________________ led by Governor Perry and Tea Party supporters rejected the idea that new _________ might be a solution. Instead they looked to ____________________________________ that would bring the budget back into balance. It took a ______________ of the legislature in June 2011 to finally pass the bill that brought the budget for 2012-13 back into balance.

Conservative Republicans; taxes; spending cuts, payment deferments, and various "revenue enhancements"; special session

The GOBPP was created in 1976, through the consolidation of an older agency, the ___________________, with the GOBPP.

Division of Planning Coordination

_____ thought that large sums would accumulate in the ESF fund. __________________ from oil and gas production in the first decade of the twenty-first century __________ the ESF with funds. By the end of fiscal year 2013 the Texas Rainy Day Fund had grown to over $______ billion.

Few; Rising tax revenues; flooded; 6.17

______ politicians have ever been willing to support an income tax. One of the attractive features of Texas to _________ has always been the absence of an income tax.

Few; business;

Two factors had delayed the full impact of the recession upon the Texas budget:

First, LBB projections in January 2009 for tax revenues for the 2010-11 biennium grossly underestimated the impact that the recession would have upon tax revenues. Second, Texas had been initially protected from the worst of the recession by an infusion of federal funding.

Some important things must be noted about this complicated system of public financing through these various budgets:

First, the state budget involves huge amounts of money, second, much of this money lies outside the direct control of the legislature, and third, federal expenditures have a very important role in shaping the overall direction of the state budget.

Utility tax revenue flows from three sources in Texas:

First, there is a tax on gas, electric, and water utility gross receipts. There are also taxes posed on the gross receipts of public utilities and a gas utility pipeline tax.

Unadjusted expenditures from the ___________________ (state funds) have increased modestly between 1994-95 and 2014-15. But expenditures from the ____________ (which takes into account federal spending) have exploded during the same period.

General Revenues Fund; All Funds budget

Tax revenues generated by the Tobacco tax rate in place before 2007 go directly into the _______________ Fund. The excess above this amount goes into the ____________________Fund. A portion of the other tax increase on tobacco products put into effect in 2007 goes to a _________________________ program.

General Revenues; Property Tax Relief; Physician Education Loan Repayment

______________ are then held by the LBB and by the GOBPP with each agency where the agency's strategic plan and LAR are discussed. LARs become the _______________ for the appropriations bill that is prepared by the LBB.

Hearings; starting point

Final versions of the budget are prepared by the _____________________________ Committee and the ______________________ Committee. Each house then _________ on the bill. Differences between the two versions of the bill are reconciled in a _________________ committee.

House Appropriations; Senate Finance; votes; conference

The budgetary process involves two stages:

In the first stage, the LBB develops a draft budget based on requests supplied by state agencies. The second stage of the budget process involves the legislative process.

The ASF also provides funds for another fund, the __________________, that funds state purchases of instructional materials.

Instructions Materials Fund

Monitoring agency compliance with the budget is the job of the

LBB and the state auditor's office.

In the spring or early summer prior to the legislative session, the LBB sends out detailed _________________________ (LAR) instructions to the agencies.

Legislative Appropriation Request

__________________________ is a publication of the LBB that contains information on the proposed appropriations bill, including expenditures for previous bienniums and proposed expenditures for the next biennium.

Legislative Budget Estimates

The ASF is funded through distributions of the _______________ and 25 percent of the state's ________ tax.

Permanent School Fund; motor fuels

Some Texans considered the ___________ a "rainy day" and urged the state government to tap the Rainy Day Fund for _______________________. Others believed that the fund should be preserved for the future and should be used only in ____________ circumstances. In the end, Governor Perry decided to use the fund only sparingly in order to balance the state budget, instead implementing ____________ in state spending on higher education, health care, and education.

Recession; education and health services; extreme; severe cuts

Collegiality on budget matters in 2013 was largely the result of ____________ control of all branches of government coupled to a burgeoning _____________ fueled by expanding job opportunities, rising housing prices, increased exports, and a resurgent oil and gas industry.

Republican; state economy

In particular, DeVore proposes creating what is called a ______________________ fund which would allow state legislators to move any surplus money into an account allowing the comptroller of public accounts to temporarily cut state sales tax rates. He argues that this would make possible a reduction of the state sales tax from 6.25 percent to 5.75 percent for approximately _____ years.

Sales Tax Relief (STaR); two

The senator sponsoring the bill, traditionally the chairman of the __________________________, appoints the chair of the Senate conferees. At least ______ members from the Senate Finance Committee must sit on the conference committee. The ___________________________________ appoints all conferees from the House as well as the chair of the House conferees.

Senate Finance Committee; two; Speaker of the House

The conference committee is composed of representatives from the __________ and the _________. Senate members are selected by the ______________________________ of the Senate.

Senate; House; lieutenant governor or the president pro tempore

The appropriations bill takes effect on _________________ in _____-numbered years.

September 1; odd

Article 3, Section 51a sets a constitutional limit on the amount of money that the state may pay out to welfare beneficiaries under the...

Temporary Assistance for Needy Families program (TANF).

An advisory committee made up of member institutions provides input to the __________________________________, which in turn makes recommendations to the legislature for budgetary allocation to each school out of the HEF.

Texas Higher Education Coordinating Board

In January 2012, __________ and the University of _____________ were identified by the Coordinating Board as being eligible to receive some of these NRUF monies subject to meeting a state audit.

Texas Tech; Houston

_______ funds and other dedicated funds exist for particular purposes and are ______ to manipulate for other budgetary purposes. Legislators seeking to balance the budget are often left with relatively _______ places to cut expenditures. Given its large proportion of the General Revenues Fund budget, _____________ is often at the top of the list.

Trust; hard; few; education

Texas has the reputation for being

a low-service, low-tax state.

Also, a constitutional amendment was proposed during the regular session and passed by the voters in November 2013 providing the establishment of two new funds: the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT). The amendment also provided for:

a onetime transfer of Rainy Day Fund monies to support the financing of water supply projects in Texas through these funds.

The GOBPP is responsible for

advising the governor regarding fiscal matters, such as preparing the governor's budget recommendations for the legislature and monitoring state appropriations and operations. It also provides analysis on fiscal and economic matters and coordinates federal programs in the state as well as assists in the operations of various regional and state planning councils.

Traditionally, Senate and House representatives ______________ each session in chairing the conference committee.

alternate

If the governor proposes a change regarding an appropriation to an agency, the LBB must __________________ the proposal. If the LBB proposes the changes, the governor must __________________ the proposal.

approve or amend; approve or amend

There are a small number of other taxes on such items as:

attorney services, cement, sulfur, coin-operated machines, and bingo rental receipts

Appropriations

authorization by the legislature to a government agency or body to spend up to a particular amount of money

One of the most distinguishing characteristics about public finance in Texas is that the state constitution mandates that the legislature operate within a "_________________."

balanced budget

The Texas Constitution requires that the Texas budget must be

balanced.

The 1970s and early 1980s were _______ years for the Texas economy. Rising __________ coupled with high ________ and rapid economic growth drove the economy forward. There were no _____ increases in Texas during this time.

boom; inflation; oil prices; tax

General Revenue-Dedicated Funds budget

budget composed of funds for dedicated revenues that target money for specific purposes; the legislature can appropriate money from these accounts only for their dedicated purposes.

Other Funds budget

budget consisting of all other funds flowing into the state treasury that are not included in other state budgets; this includes the Texas Highway Fund, various trust funds operated by the state, and certain revenues held for local higher education accounts

General Revenues Fund budget

budget for a nondedicated revenue account that functions as the state's primary operating fund; most state taxes and fees flow

All Funds budget

budget that aggregates all monies flowing into the state treasury and all state spending

There are actually a number of different ways to talk about the funds that constitute the "________." One way to look at them is to divide them into _______ broad budgetary categories.

budget; five

Under Article 3, Section 49a, of the Texas Constitution, the comptroller has the formal authority to "_________" the budget. This means that the comptroller confirms that the comptroller's office has analyzed the budget and concluded that it is within the current revenue estimates. For all intents and purposes, the budget is being declared ___________.

certify; balanced

There are a variety of other specific sales taxes that bring revenue into the state to fund government, including:

cigarettes, alcohol, and gasoline.

The LBB may adopt "a more _____________________ of the rate of growth" if the alternative definition is approved by a special committee composed of the ___________________________________.

comprehensive definition; governor, the Speaker of the House, and the comptroller

After the legislature passes the biennial state budget, the state ______________ certifies the budget, confirming that it is within current revenue estimates for the period.

comptroller

One of the most important consequences of the pay-as-you-go limit is to put the _____________ at the heart of the budget process.

comptroller

The so-called franchise tax is imposed on all _____________ in Texas. Prior to 2008 the tax was imposed on taxable __________ and on _____________.

corporations; capital; earned surplus

Legislative goals are met through the ________ of these funds and the _____________________________ of funds to and from them.

creation; allocation and reallocation

The state constitution also limits the amount of _______ the state can incur.

debt

Because of the effects of the economic slowdown brought on by the Great Recession, motor vehicle sales and rental taxes ___________ by 5.6 percent in the 2010-11 biennium to $5.6 billion.

declined

Available School Fund (ASF)

dedicated fund established by the constitution for the support of public education in the state

The revenues flowing from the motor fuels tax are "_____________" monies. This means that the tax revenues can only be used for purposes specified by the _______________.

dedicated; legislature

Unlike the federal government, Texas state government cannot approve a budget ___________ and must pass a balanced budget every two years.

deficit

The biggest threat to a balanced budget for the 2012-13 biennium _________ lie in school funding or even in sales tax receipts. President Obama's federal reforms to _____________ presented new short-term and long-term spending commitments that could pose new and unanticipated challenges to the Texas budget in coming years.

did not; health care

Under Texas law, the LBB determines proper financial figures by

dividing the estimated total state personal income for the next biennium by the estimated total state personal income for the current biennium.

Real per capita dollars

dollars spent controlling for inflation and population increases

Unadjusted dollars

dollars spent not taking into account inflation or population increases

In theory, Texas has a "_____________" system. This means that responsibility for preparing an initial draft of the budget is shared by the governor through the ____________________________________. In practice, the budget is primarily the responsibility of the _______________.

dual-budget; Governor's Office of Budget, Planning, and Policy (GOBPP) and the legislature through the LBB; legislature

The governor and LBB have the authority to _________ the budget. This includes the power to ________ funds between agency programs or between agencies if necessary when the legislature is ______ in session.

execute; shift; not

The proportion of state employees to the population in Texas is

far below the national average.

Next to taxes, the second-largest source of revenue for Texas is the __________________.

federal government

Matching funds

federal monies going to a state based on state spending for a program

If legislators want ________ dollars, they must spend ________ dollars first.

federal; state

A 2013 study conducted by the Institute on Taxation and Economic Policy found that among the states Texas had the _______ most regressive tax system in the nation.

fifth

Once the bill passes the conference committee, it is returned to both houses for _______ passage.

final

Although the legislature can override the comptroller's estimates with a ___________ vote of each house, this has ________ happened. The BRE is updated by the comptroller when _________________ change significantly and for ______________ of the legislature.

four-fifths; never; economic conditions; special sessions

It is not too far from the truth to say that ______________________, new technologies lying behind Texas's latest oil boom, have come to the rescue of the state budget in the nick of time.

fracking and horizontal drilling

In an effort to replace lost property tax revenues and maintain funding levels at the schools, the legislature also increased the state corporate _____________ tax and the _____________ tax. Proponents argued that this shortfall would _____________ as new tax collections grew. These optimistic predictions were _________.

franchise; cigarette; evaporate; wrong

By the spring of 2014 the Texas economy was in ______ recovery. Increasing _______ tax and _________________ tax revenue meant that the budget was looking good for the upcoming legislative session in the spring of 2015.

full; sales; oil and gas severance

Permanent School Fund (PSF)

fund created in 1854 that provides monies for primary and secondary schools

Economic Stabilization Fund (ESF)

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

Permanent University Trust Fund (PUF)

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

National Research University Fund (NRUF)

fund established in 2009 to provide funding to universities seeking to achieve national prominence as research institutions; Under the amendment, money was transferred from the HEF to the NRUF.

State Highway Fund

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

The National Research University Fund

funds Texas universities seeking national prominence as research institutions.

Issues of _______________ equity thus lie at the heart of managing the PSF. Future ______________ are not to be sacrificed to solve current budgetary shortfalls.

generational; generations

In 1967 the legislature designated the ____________ the chief planning officer of the state.

governor

After certification, the budget moves on to the ______________, who can sign, not sign, or veto the entire bill or exercise the line-item veto. With the line-item veto, in particular, they have the power to ___________ some of the compromises that legislators may have forged to get the bill through the committee system.

governor; unravel

The bulk of federal funds expenditures is in two areas:

health and human services, and education.

Federal expenditures primarily affect the state budget in which two areas?

health-human services and education

A key component of the 2008 financial crisis was ___________________ like this one in San Antonio.

home foreclosures

According to provisions set out in Article 3, Section 49a, under conditions of "_____________________" the legislature may with a four-fifths vote in each house decide to spend in excess of anticipated revenue.

imperative public necessity

Unlike sales and use taxes, which are applied equally to everyone whatever their _________, income taxes can be made ____________.

income; progressive

A complex schedule of tax rates is applied to _____________ premiums. For example, life, health, and accident insurance is taxed at the rate of _______ percent on gross premium receipts.

insurance; 1.75

In addition to federal monies, there are a number of other revenue sources, including:

interest income, licenses and fees, the sales of goods and services provided by the state, and land income.

The Legislative Budget Board (LBB)

is responsible for determining what the proper financial figures are to meet this mandate.

National Research University Fund eligibility criteria as well as distribution rules were established in 2011 by the _______________. An institution must be identified as an __________________ research university by the Higher Education Coordinating Board and must expend at least $45 million in specifically defined types of _____________.

legislature; emerging; research

Prior to 2003 tuition and fee rates for state universities had been set by the state _______________, and in Texas they tended to be _____ when compared to tuition in other states.

legislature; low

The Legislative Budget Board is chaired by the __________________. The vice chair is the _________________. Other members include the chairs of the ________________________________________________________________________. ______ additional members from the Senate and the House are chosen by the lieutenant governor and the Speaker, respectively.

lieutenant governor; Speaker of the House; House Appropriations Committee, the House Committee on Ways and Means, the Senate Finance Committee, and the Senate State Affairs Committee; Two

Before 1949 there was ________ coordination in public budgeting. Financial procedures ________, and state agencies were funded by ____________ appropriations.

little; varied; individual

Texas has a reputation of being a "__________________" state that seeks to maintain a favorable environment for business.

low service, low tax

The Texas debt burden is relatively _____. Texas's per capita state debt was ranked ___th out of the 50 states.

low; 45

Texas's reputation as a ____-spending state is well earned. Conversely, Texas ranked ______ when compared to other states on the per capita federal dollars flowing into the state.

low; high

Although Texas state taxes are _____ compared with other states' taxes, _______ taxes are a different story. When state and local taxes are taken together, however, Texas ____________ a low-tax state. Combined state and local taxes were $3,197 per capita in 2009, ranking Texas ____th in the nation.

low; local; remains; 45

The franchise tax became a "_____________" based on the "_______________."

margins tax; taxable margin

The bills then work their way through the committee system of each house separately and are subject to hearings, debates, and revisions. This process of drafting the bill is referred to as a "___________."

markup

The pressure to ____________ federal dollars flowing into Texas is one legislative goal. But legislators also desire to __________ state spending and ________ taxes.

maximize; minimize; not raise

The Texas Supreme Court had ruled in West Orange Cove ISD v. Neeley that school districts needed to have some "______________________" in the setting of property tax rates. If all property tax rates were set at the _________________ allowed under law, a situation found in many districts, the court concluded that a ______________ property tax essentially would have been put into place, and this was a violation of the state constitution prohibiting such a tax.

meaningful discretion; maximum; statewide

Although the lottery was passed by voters overwhelmingly, attitudes about the appropriateness of using gambling as a source of state revenues are __________.

mixed

Debt service

money spent by the state to pay off debt; includes interest and principal payments

Article 8, Section 22, which was passed in 1978, specifies that the growth in appropriations cannot be _______ than the growth of the state's economy, _____ counting dedicated spending as specified in the state constitution.

more; not

The goals of the legislature in reworking the franchise tax were to make it _______ difficult for corporations to escape the tax and to offset some of the costs of ______________ reform.

more; property tax

The tax on tobacco products like cigars, snuff, chewing tobacco, and smoking tobacco is based on the manufacturer's listed __________. Approximately 87 percent of tobacco taxes are derived from ___________ sales, the remainder from other tobacco products.

net weight; cigarette

Expenditures may be made directly from the ____________________ funds and may be transferred to special funds or accounts for allocation.

nondedicated

If the general appropriations bill is ______ certified by the comptroller, it is returned to the _________ in which it originated. The legislature must then either __________ expenditures or _________ revenues to make up the difference.

not; house; decrease; raise

There have been _____________ calls for the institution of a state income tax in Texas. Supporters argue that not only is the income tax a ________ reliable source of revenue for the state, it can also be made _________.

occasional; more; fairer

The collapse of ____ prices and a sputtering state economy in the mid-1980s, particularly severe in ___________________________, brought on a budget crisis. As projected deficits mounted, _____ increases became commonplace. Income from the oil severance tax alone dropped ____ percent.

oil; real estate and construction; tax; 28

On the one hand, some policy makers, such as Chuck DeVore of the Texas Public Policy Foundation, a conservative think tank in the state, argue that the surplus means that Texas taxpayers have ____________ the state and they should receive refunds.

overpaid

The balances in the General Revenue-Dedicated Funds budget are used to certify that the constitutional _______________ limits are being met.

pay-as-you-go

Utility tax rates vary from 0.581 percent to 1.997 percent based on the size of the city _______________.

population

Article 3, Section 49a (Pay-as-You-Go Limit)

portion of the Texas Constitution that requires the state to maintain a balanced budget

The tax revenue from oil production fluctuates with the _______ of oil and the _________ of oil produced in Texas.

price; volume

Under law, the LBB is __________ from distributing the budget or the appropriations bill to either the legislature or the governor until this limit on the _________________________ has been adopted. If the LBB fails to adopt a growth limit (and a spending limit), the rate of growth in the state's economy is treated as if it were _______. State revenues not dedicated by the Texas Constitution to particular functions must remain at __________ level as in the previous biennium.

prohibited; rate of growth of appropriations; zero; the same

Like the franchise tax reforms, increases in the tobacco taxes passed in 2006 were linked to _____________ relief.

property tax;

Most of the remaining 1/4 of the motor fuel tax monies are dedicated to:

public education.

Although Texas escaped the worst of the real estate collapse, largely because the _________________ had been more muted in Texas than elsewhere, _________ tightened and ____________ values declined across the state through 2007, 2008, and 2009. As property values declined, so did _________ tax revenues.

real estate bubble; credit; property; property

One of the chief effects of the Great Recession across the country was the sharp contraction in _______________ prices. Low interest rates supported by Federal Reserve policy along with loose credit standards had led to a "___________" in real estate that had pushed up property values through the early years of the twenty-first century.

real estate; bubble;

The LBB appoints a budget director, who brings together budgeting ____________ from the various state agencies and ______________ appropriations bills for them.

requests; prepares

Under a constitutional amendment passed in 1985 (now Article 16, Section 69), the legislature was empowered to establish ______ for the expenditure of funds by state agencies.

rules

The most important single tax financing Texas government is the ____________.

sales tax

Government and public policy in Texas are funded from a variety of sources, including:

sales tax, severance taxes on oil and natural gas produced in the state, licensing income, interest and dividends, and federal aid.

What had been a banking crisis at the national level became a funding crisis at the state and local levels, particularly for ___________________________________ where funding was based largely on property taxes.

schools, community colleges, and health districts

The __________-largest educational endowment in the country, the PSF is managed primarily by the state board of ___________. The fund distributes money to school districts across the state based on ______________ and guarantees _________ issued by local school boards, enabling them to get lower interest rates in the bond markets.

second; education; attendance; bonds

Texas is one of ________ states that still do not have a personal income tax. Two states, Tennessee and New Hampshire, only tax income from _______________________.

seven; dividends and interest

By the _____________ day of each regular session, appropriations bills are submitted by the LBB to the _____________________ Committee and the ______________ Committee. Traditionally, the bills are introduced to these committees by their respective chairs, although _______________ may do so.

seventh; House Appropriations; Senate Finance; any member

Federal aid to Texas _______________ in the 1980s because of the expansion of transportation and human-services programs. Much of the increase in these federal funds in recent years can be attributed to __________.

skyrocketed; Medicaid

The number of workers employed by Texas was _________ than that of many other states. In 2011 there were ____ state employees for every 10,000 people living in Texas. This figure was far ________ the U.S. state average of 140 state employees for every 10,000 state residents, ranking Texas ___rd among the 50 states.

smaller; 124; below; 43

Which solution was put into place to address the budget crisis of 2011?

speeding up the payments of various taxes on alcohol and motor fuels

The most important initiatives taken up to address the budget shortfall were _________________.

spending cuts

The initial response of state leaders to the impending fiscal shortfall was a call for immediate ___________ cuts in the current fiscal year. State leaders also drew upon the __________________ (the Rainy Day Fund).

spending; Economic Stabilization Fund

Federal Funds budget

state budget that includes all grants, payments, and reimbursements received from the federal government by state agencies and institutions

Higher Education Fund (HEF)

state higher education fund for universities not having access to PUF monies; It is funded through the General Revenue Fund.

There are a variety of taxes that individuals can pay to the state government, including:

state income taxes, general state sales taxes, specific state sales taxes, local sales taxes, and property taxes.

Two measures are often used to compare tax burdens across states:

state tax revenue per $1,000 of personal income and per capita state tax revenues.

The Property Tax Relief Fund was established to

take in excess revenue above and beyond the pre-2008 franchise tax amounts, which were put in the General Revenue Fund.

In 2014-15, 47.4 percent of state revenues are expected to come from ________ of one sort or another. Many of these taxes are based on ________________. People often are ___________ that they are paying them.

taxes; complex formulas; unaware

The General Revenues Fund budget also includes three educational funds:

the Available School Fund, the State Textbook Fund, and the Foundation School Fund

Which factors lie behind the budget crisis of 2011?

the Great Recession and property tax reform

The General Revenue-Dedicated Funds budget includes:

the State Parks Account and the college operating accounts (which hold tuition funds).

About 3/4 of motor fuel tax monies are appropriated to:

the Texas Department of Transportation and the Texas Department of Public Safety and are dedicated to the construction, maintenance, and policing of public roads.

General Revenue Fund

the state's primary operating fund; consists of two parts: nondedicated general revenue and general revenue-dedicated accounts.

Under certain extraordinary circumstances, ESF monies can be appropriated only with a ___________ vote of members of both houses of the legislature. These circumstances include when a ______________ develops in a biennium or the comptroller estimates that revenue will ________ from one biennium to the next. Money can also be appropriated from this fund for other purposes at any time with the support of ___________ of present members in each house.

three-fifths; budget deficit; decline; two-thirds

A number of constitutional factors affect the way the budget is made in Texas. Probably the biggest constraint on the budgetary process has to do with ______ limits.

time

The effects of the restricting constitutional factors for projecting a budget in Texas are:

to force government agencies to project their budgetary needs well in advance of any clear understanding of the particular problems they may be facing during the biennium giving little time to spend analyzing the budget or developing innovative responses to pressing matters. a large portion of the biennial budget is dedicated for special purposes by federal law or by the Texas Constitution or state statute.

The principal job of the Legislative Budget Board is

to recommend appropriations for all agencies of state government.

Public finance deeply affects the ___________ in Texas's public policy.

trade-offs

Perhaps the most controversial budget issue dealt with by the legislature during the 2013 session centered upon _______________ policy.

transportation

The legislature is compelled to write a ______-year, or biennial, budget because of the constitutional provision that the legislature may meet in ___________ session only once every two years.

two; regular

Regressive

type of tax where the tax burden falls more heavily on lower-income individuals

Progressive

type of tax where the tax burden falls more heavily on upper-income individuals

Half of any "_________________" general revenue, that is, revenue not already targeted for a specific purpose, also goes into the Rainy Day Fund. The legislature has the authority to contribute additional funds ________________.

unencumbered; but never has

The Rainy Day Fund

was designed to provide funding for the state during times of financial distress.

The Great Recession _________ the only cause of the financial shortfall. There were also long-term structural problems facing the budget brought on by _________ tax reform.

was not; property

The governor is able to move funds from one account to another ________ permission of the LBB if he declares an _______________. Such a situation has only occurred ______—in the summer of 2014—when Governor Perry declared an emergency and transferred funds to pay for the deployment of National Guard troops along the border with Mexico to cope with illegal immigration into Texas.

without; emergency; once

A Texas personal income tax

would have to be approved by the voters, and the revenues from it would have to support public education.

Specific rules govern how disagreements between the Senate and House versions of the appropriations bills are to be handled:

• Items that appear in both versions of the bill must be included in the final conference committee report. • Items that appear in both versions of the bill with identical amounts allocated to them may not be changed by the committee. • Items that appear in both versions of the bill with differing amounts allocated to them cannot be eliminated. The committee has the discretion to fund these items at a level not larger than the larger allocation or smaller than the smaller allocation. • Items that appear in one version of the bill but not the other can be included or eliminated from the final bill subject to the discretion of the committee. However, no more money may be allocated to that item than is found in the original version of the bill. • Items found in neither version of the bill may not be included in the final conference report. However, the conference committee has the discretion to propose the appropriation of money for bills that already have been passed by the legislature.