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%