POLS 207 HANEY Chapter 13

Mixed drink tax

14% of sales

Liquified gas tax

15 cents per gallon

Sales Tax and Use Act

1967, authorized cities to add a local tax of 1% on all retail sales

Money from sales tax

$25 billion, 54% of Texas taxes in 2013

Revenue from extra taxes

$3 billion per year or 8% of states total revenue

How much of ESF was used during the economic downturn?

$3.2 billion

Revenue of franchise tax

$4 billion or about 10% of all state tax revenue

Newest Sin Tax

$5 fee for each person entering a business that provides live nude entertainment. Also known as the pole tax

Five stages of policymaking process

1. Agenda Setting 2. Policy formation 3. Policy adoption 4. Policy Implementation 5. Policy Evaluation

Three types of policies

1. Redistributive 2. Distributive 3. Regulatory

Property tax increase cap

10% per year

Texas Emerging Technology Fund (TETF)

2005, Texas legislature created TETF to support start up companies in cutting edge fields. Since its creation it has handed out over 190 grants totaling $425 million that are made to create jobs and bring more high tech industry to Texas

Reduced school property taxes

2006, Texas legislature reduced school property taxes by one third. Plan traded lower school property taxes for higher taxes on businesses, smokers, and used-car purchases.

Even more uses for the ESF

2013 amendment also allowed some state to divert some oil and gas production tax revenue into the ESF for road construction and maintenance

Tax on manufactured housing

3.25%

Natural Gas Tax

7.5% of market value

Oil Regulation Tax

A form of severance tax, takes 3/16th of a cent from each barrel of oil produced

Oil Production Tax

A form of severance tax, takes 4.6% of the market value of oil produced

Progressive Tax

A graduated tax, such as an income tax, which taxes people with higher incomes at higher rates

Regressive income tax

A tax that takes a higher proportion of income form people with lower incomes that with higher incomes

The Legislative Budget Board

Also known as the LBB, it was created in 1949 to help coordinate the budgeting process in TX. Co-chaired by the speaker of the house and lieutenant governor. Sometimes works with governors office of budget planning and policy.

Tax Expenditures

Any reductions in tax liabilities that result form tax benefits to particular taxpayers rather than taxpayers in general. It can be used to encourage certain types of business

Regulatory

Attempts to limit or control the actions of individuals or corporations. For example, businesses facing fines or other penalties is a disincentive for polluting or causing other socially undesirable outcomes

What does the franchise tax, tax?

Based on either the net taxable capital or net taxable earned surplus of a business

Ad Valorem Tax

Based on the blue of the property. Even if that property tax rate stays the same, governments may raise their appraisals to get more money

Best comptroller

Bob Bullock. He increased tax collections through a combo of updated tach and aggressive auditors that came to be known as "Bullocks Raiders"

What falls under sales tax?

Certain services, retail sales, and the leases and rentals of most goods

Formula one racing in Texas

Comptroller Susan Combs agreed to pay over $250 million to bring formula one racing to TX which came from the Event Trust Fund

What is 75% of gas tax set aside for?

Construction, maintenance, and policing of the states roads

Legislative Appropriations Request

Contains the performance measures that will be used to gauge how effectively the agency is accomplishing its basic mission

Federal contribution to state budget in 2010

Drop in sales tax revenue due to economic downturn combined with surge in spending on stimulus programs brought the federal contribution to the state budget to over 42% in 2010

Who else views requests

During legislative session the Senate Committee on Finance and the House Committee on Appropriations independently holds hearings and hear testimony from the states agencies that want CASH

Rainy Day Fund

Economic Stabilization Fund (ESF)

Progressive Tax Example

Federal income tax

Sales tax

First implemented in 1961; 2% on goods sold. That has gone up to 6.25%

What is exempt from sales tax?

Food products for human consumption are exempt from the sales tax unless they are candy, soft drinks, or prepared meals

Top 10% scholarship

For high school students in top 10%

Policy Adoption

Formal government action takes place with the approval of the legislature or through administrative actions by a member of the executive branch

Largest source of investment

From the states Permanent School Fund (PSF)

Permanent School Fund

Funds set aside to finance education in Texas

Fiscal transfers

Gap between what some states get and what their residents pay

Gas Tax

Gasoline and diesel fuel is taxed 21 cents on every gallon sold ( on top of 18.4 cents a gallon in federal taxes)

Policy evaluatoin

Government agencies, the legislature, and interest groups asses the implementation of the policy to determine if its goals are being met

Fiscal policy

How the government seeks to influence the economy through taxing and spending

More uses for ESF

In 2013 Texas Voters did constitutional amendment that would allow the state to use $2 billion from the ESD to finance water projects

Budget Process

In spring and summer preceding the legislative session, the LBB sends out a legislative appropriation request (LAR) that state agencies use to develop their budget requests

Subsidies

Includes policies intended to shape the health of the economy overall, as well as policies the state uses to encourage specific businesses and discourage others

Why is LBB so powerful

Inclusion of leaders of both houses

How to use funds from ESF

It is difficult. Under certain circumstances such as when the comptroller certifies a budget deficit, the legislature may appropriate money from the ESF with 3/5 vote of each house

Towards EXcellence Access and Success (TEXAS) grant

Many students attend college with aid of it. Created to help Texan families that may have trouble paying for college

What is the basic for budget that will be proposed to legislature?

Meeting between LBB and GOBPP

Federal grants

Money from federal government accounted for almost 1/3 of the states finances

Redistributive

Moves benefits (usually money) from one group to another in an attempt to equalize society by taxing people with higher incomes to provide benefits to people with fewer resources

Revenue from gas tax

Over $3 billion a year, 8% of states total revenue

Agenda setting

Policymakers prioritize the various problems facing the state

Policy formation

Possible solutions are developed and debated

Franchise tax:

Primary tax on businesses, based on taxable margin of each company (margins tax). It is regarded as the most destructive tax because it imposes a higher burden on some industries than others

Reasons for state to borrow over $200,000

Repel invasion, suppress insurrection, defend state in war, or it is approved by voters

Regressive Tax Example

Sales tax, critics say that poor people buy more of the things that have sale tax

ESF

Set up by a constitutional amendment by voters in 1988. It receives an amount equal to 75% of the amount of oil and natural gas production tax collections in excess of 1987 levels and 75% of the amount of natural has tax

Distributive

Similar to redistributive except that it attempts to meet the needs of citizens without targeting any one group as the source of money. Easier to implement because their costs are widely dispersed. There is less opposition since not one individual group is targeted for funds

Example of Tax Expenditure

Special tax breaks to natural gas drilling because of high costs associated with it. Tax free holiday since 1999

Policy implementation

State agencies follow up on the actions of elected officials. Bureaucratic agencies develop rules and regulations that detail the guidelines for how the policy will be carried out

Cigarette tax

State tax on cigarettes help fund schools. In 2007 state tax on cigarettes jumped a full dollar to $1.41 a pack

Senior citizens

TX constitution amended in 2003 to allow cities and counties to cap senior citizens taxas

Severance tax

Tax on natural resources charged when they are produced or "severed" from the earth

Property Tax

Tax on the value of real estate that is paid by the property owner. Statewide property tax is forbidden by Texas constitution

Excise tax

Tax paid at the time of purchase with the cost of the usually included in the price of the product

Sin Taxes

Taxes on products or activities that some legislators want to discourary

Additional local taxes

Texas cities, counties, transit authorities, and other special-purpose districts have the option of imposing an additional sales tax for a combined max of 8.25%

Texas State budgeting

Texas has a "pay-as-you-go" system that requires a balanced budget and permits borrowing under very few conditions

In addition to sales tax...

Texas has a separate tax of 6.25% on the sale, rental, or lease of motor vehiles

Way for Texas to borrow more money

Texas legislature may declare an emergency buy doing so requires getting 4/5 vote from both the Texas house and senate before the spending limit can be exceeded

What happens at the beginning of each legislative session

The Texas Constitution requires that the comptroller certify how much money will be in the states accounts in the two years that the legislature is budgeting for

Policy

The actions and activities of government

What happens after appropriations bill is passed?

The comptroller must certify that sufficient revenue will be available to pay for budget, then goes to governor for signature

What can governor do with the appropriations bill

The governor has line item veto so he can remove individual lines.

How to use funds from ESF

The legislature can use funds form the ESD for any purpose with 2/3 vote of members present in each house

Booming oil and gas

The severance tax goes to the state while counties must rely on the less booming property tax to repair the roads from the damage of the booming oil and gas

Reason for low gas tax

Toll roads make up for difference

Subsidies

a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.

States tax on natural gas

accounts for only 3.1% of all state taxes

Revenue form interest

in 2013 state got $1.2 billion in income form returns on its bank balances and other investments

State Spending

is going up doe to inflation but also because the state is getting bigger

Oil taxe

only about 6% of the state's tax revenue

Transit authority tax

up to 1%

County tax

up to 1.5%

City tax

up to 2%

Special purpose districts tax

up to 2%