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Finance Flashcards

Public Finance in Texas (ch. 11)

General Revenues Fund budget: Budget for a nondedicated revenue account that functions as the state’s primary operating fund
General Revenue-Dedicated Funds budget: Budget composed of funds for dedicated revenues that target money for specific purposes
Federal Funds budget: State budget that includes all grants, payments, and reimbursements received from the federal government by state agencies and institutions
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 toy the state, and certain revenues held for local higher education accounts
All Funds budget: Budget that aggregates all monies flowing into the state treasury and all state spending
Regressive tax: Type of tax where the tax burden falls more heavily on lower-income individuals
Progressive tax: Type of tax where the tax burden falls more heavily on upper-income individuals
Matching funds: Federal monies going to a state based on state spending for a program
General Revenue Fund: The state’s primary operating fund
Permanent School Fund (PSF): Fund created in 1854 that provides monies for primary and secondary schools
Available School Fund (ASF): Dedicated fund established by the constitution for the support of public education in the state
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
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
Higher Education Fund (HEF): State higher education fund for universities not having access to PUF monies
National Research University Fund (NRUF): Fund established in 2009 to provide funding to universities seeking to achieve national prominence as research institutions
Article 3 Section 49a (Pay-as-You-Go Limit): Portion of the Texas Constitution that requires the state to maintain a balanced budget
Appropriations: Authorization by the legislature to a government agency or body to spend up to a particular amount of money
Debt service: Money spent by the state to pay off debt; includes interest and principal payments
The Texas Constitution requires that the Texas budget must be- Balanced.
Federal expenditures primarily affect the state budget in which two areas? Health-human services and education
Texas has the reputation for being- A low-service, low-tax state
The proportion of state employees to the population in Texas is- Far below the national average
One major revenue source for Texas is the sales tax, which is- 6.25% for state government and 2 % for local government.
A Texas personal income tax- Would have to be approved by the voters, and the revenues from it would have to support public education.
The Rainy Day Fund- Was designed to provide funding for the state during times of financial distress.
The National Research University Fund- Funds Texas universities seeking national prominence as research institutions.
Which of the following is not a constitutional constraint on the budgetary process in Texas? The annual budget
What is meant by “the budget-execution authority”? The legislature’s power to establish rules for the expenditure of funds by state agencies
Who is the chief planning officer of the state of Texas? The governor
The principal job of the Legislative Budget Board is- To recommend appropriations for all agencies of state government
Which factors lie behind the budget crisis of 2011? The Great Recession and property tax reform
Which solution was put into place to address the bud-get crisis of 2011? Speeding up the payments of various taxes on alcohol and motor fuels
Prior to 2003, tuition for public colleges and universities in Texas was set by the state legislature.
Prior to 2003, tuition rates for public colleges and universities in Texas tended to be low compared to other states.
Following a legislative decision in 2003 to reduce state funding to higher education, which source of university revenue began to increase most rapidly? student tuition and fees
Why must the Texas legislature maintain a balanced budget? It is required by the Texas Constitution.
The ___ budget is one composed of funds for dedicated revenues that target money for specific purposes. General Revenue-Dedicated Funds
Given the budget structure and constitutional limitations upon spending and taxing, legislators seeking to balance the budget are left with few choices as to how to balance the budget.
Federal money is an important part of the Texas budget, but monies that Texas receives from the deferral government often come with strings attached
Federal funds appropriated in Texas generally are concentrated in a few state agencies.
Texas seeks to maintain a favorable environment for health and human services
TX spending on per capita basis is: Much lower than the national average
in 2012, TX ranked ____ when compared to other states on the per capital federal dollars flowing into the stat high
There is a high sales tax in TX of ___% 6.25
What is the single largest tax revenue for the state of TX? Sales tax
What determines the amount of tax revenue generated from oil and natural gas produced in TX? market price and the amount produced
The revenues flowing from the motor fuels tax are dedicated to what 4 areas? 1. maintenance.2.policing of public roads3.public education4.construction
Overall, the tax system in Texas is generally considered to be regressive, which means that the tax burden consumes a greater percentage of income received by lower-income individuals.
Who pays the greatest portion of their income in property taxes? Poor homeowners and renters
The following 4 are generally considered to be examples of regressive taxes or fees? 1. sales taxes2. property taxes3. auto registration and inspection fees4. excise taxes on alcohol and cigarettes
What is the argument commonly used by supporters of a state income tax? It is a fairer and more reliable source of revenue.
If Texas instituted a progressive income tax, low-income Texans would pay a lower tax rate than wealthy Texans.
Texas will never have a personal income tax in the future because Bullock proposed a constitutional amendment that effectively gave the electorate a veto over any proposal for an income tax.
Next to revenue generated by state taxes, the second-largest source of state revenue comes from the federal government.
In addition to federal monies, which two other sources in recent years have had a major impact on monies flowing into the state budget? the state lottery and the settlement the state reached with tobacco companies
Federal matching funds are awarded to states that agree to fund a federal program on behalf of their own citizens.
The Permanent School Fund distributes money to school districts across the state based on what two factors? student attendance and guaranteed bonds issued by local school boards
The Economic Stabilization Fund is also known as the Rainy Day Fund
The Permanent University Fund was established in 1876 with a land grant of 1 million acres. It contributes to the support of the University of Texas and Texas A&M university systems
For universities to be eligible for the National Research University Fund they must meet at least all of the following: 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.
One significant component of the budget process that is relatively unique to Texas is the constitutional mandate that Texas legislators write a budget every two years.
Which of the following is at the heart of the budget process in Texas? the Texas comptroller
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. 1%
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? the legislature
The following four individuals are key players in the budgetary process: 1. the comptroller of public accounts2. the governor3. the lieutenant governor4. the chairman of the House Committee on Ways and Means
The purpose of the Biennial Revenue Estimate is to provide a detailed forecast of total revenues that the state is expected to take in.
Nationally, what two factors caused the bubble in the real estate market? low interest rates and loose credit standards
When compared to the rest of the nation, the real estate collapse in Texas was less severe
The Texas legislature increased ____ to help compensate for lower property tax revenues in the 2012-2013 budget cycle. state corporate franchise taxes and cigarette taxes
What action forced the legislature to bring the 2012-2013 state budget into balance? A special session of the Texas legislature voted for a balanced budget.
To address the budget shortfall in the 2012-2013 budget, the most common tactic used by the legislature was spending cuts.
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 increasing health care costs due to recent efforts to reform the health care system.

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