Deck 11: Public Finance in Texas

Question 1

Federal funds appropriated in Texas generally are

A) widely disbursed across numerous state agencies.
B) concentrated in one agency.
C) concentrated in a few state agencies.
D) determined at each annual legislative session.
E) earmarked almost exclusively for education.

Answer 1

C

Question 2

Which of the following are NOT generally considered to be an example of regressive taxes or fees?

A) sales taxes
B) property taxes
C) auto registration and inspection fees
D) income taxes
E) excise taxes on alcohol and cigarettes

Answer 2

D

Question 3

Texas has a reputation of being a ________ state.

A) "low service, high tax"
B) "low service, low tax"
C) "no services, low tax"
D) "high service, high tax"
E) "high service, low tax"

Answer 3

B

Question 4

Texas seeks to maintain a favorable environment for

A) labor.
B) teachers.
C) businesses.
D) natural resources.
E) health and human services.

Question 5

Who pays the greatest portion of their income in property taxes?

A) business owners
B) wealthy homeowners and renters
C) poor homeowners and renters
D) renters
E) everybody pays the same

Question 6

According to our text, what determines the amount of tax revenue generated from oil and natural gas produced in Texas?

A) the minimum wage and unemployment rate
B) market price and the amount produced
C) federal regulations and excise taxes imposed by the federal government
D) pipeline construction and environmental issues
E) refinery capacity and foreign competition

Question 7

The ________ budget is one composed of funds for dedicated revenues that target money for specific purposes.

A) General Revenues Fund
B) General Revenue-Dedicated Funds
C) Federal Funds
D) Rainy Day Funds
E) Miscellaneous Funds

Question 8

Which is the single largest source of tax revenue for the state of Texas?

A) income
B) sales
C) property
D) gasoline
E) various taxes on the energy industry

Question 9

In May 2014, the UT System Board of Regents decided on all of the following EXCEPT

A) not to raise tuition for in-state students.
B) provisions to raise out-of-state tuition.
C) that the Board allocate monies to UT Austin from the state's Permanent University Fund.
D) that universities were allowed to approve optional four-year fixed tuition programs.
E) that the Board allocate monies to other Texas schools from the Available University Fund.

Question 10

Texas spending on a per capita basis is

A) about even with the national average.
B) much higher than the national average.
C) much lower than the national average.
D) among the highest, particularly in education.
E) second only to that of New York State.

Question 11

The revenues flowing from the motor fuels tax are dedicated to all of the following EXCEPT

A) construction.
B) maintenance.
C) policing of public roads.
D) public education.
E) health and human services.

Question 12

Prior to 2003, tuition for public colleges and universities in Texas was set by the

A) Board of Education.
B) state Department of Education.
C) governor's Department of Education.
D) state legislature.
E) federal government.

Question 13

Why must the Texas legislature maintain a balanced budget?

A) It is required by the U.S. Constitution.
B) It is required by the Texas Constitution.
C) Each legislative session decides to balance or not balance the state budget.
D) The Texas Office of the Comptroller writes the state budget.
E) Prior to assuming office, politicians in Texas swear an oath to balance the budget.

Question 14

Given the budget structure and constitutional limitations upon spending and taxing, legislators seeking to balance the budget are left with

A) many choices as to how to balance the budget.
B) few choices as to how to balance the budget.
C) only one choice as to how to balance the budget.
D) no other option than to borrow heavily, thereby increasing state debt.
E) This issue is not discussed in the text and is therefore of no consequence.

Question 15

There is a high sales tax in Texas of ________ percent.

A) 8.25
B) 6.15
C) 8.75
D) 6.25
E) 9

Question 16

Overall, the tax system in Texas is generally considered to be regressive, which means that

A) the tax burden consumes a greater percentage of income received by lower-income individuals.
B) the tax burden consumes a greater percentage of the income earned by higher-income individuals.
C) everybody pays the same percent of his or her income in taxes.
D) the more income one has, the larger the percentage of it that goes to pay taxes.
E) higher-income individuals pay progressively more taxes based on their incomes.

Question 17

Prior to 2003, tuition rates for public colleges and universities in Texas tended to be

A) slightly above the national average.
B) slightly below the national average.
C) about even with the national average.
D) much higher than the national average, because Texas has no state income tax.
E) low compared to other states.

Question 18

Following a legislative decision in 2003 to reduce state funding to higher education, which source of university revenue began to increase most rapidly?

A) gasoline taxes
B) student tuition and fees
C) general revenues
D) state income taxes
E) Texas state lottery revenues

Question 19

Federal money is an important part of the Texas budget, but monies that Texas receives from the federal government

A) often come with strings attached.
B) are usually categorical grants with no federal guidelines or mandates whatsoever.
C) are too insignificant to be included in the state budgetary process.
D) are usually not received in time to affect the budget process.
E) are usually earmarked for powerful Texas labor unions.

Question 20

In 2012, Texas ranked ________ when compared to other states on the per capital federal dollars flowing into the state.

A) low
B) about even
C) high
D) first
E) last

Question 21

Which statement regarding state-federal spending in Texas is true?

A) Texas spends more on state-federal programs than most states do.
B) Texas spends less on state-federal programs than most states do.
C) Texas spends more than any other state for state-federal programs because Texans favor massive public welfare programs.
D) State-federal spending in Texas has been historically high relative to that of the rest of the states.
E) Federal efforts to balance the budget have virtually eliminated all state-federal spending in Texas.

Question 22

What entity determines how much money is available to public education through the Permanent School Fund?

A) the governor
B) the Texas Higher Coordinating Board
C) the State Board of Education
D) a Blue Ribbon Committee on education
E) the state education secretary

Question 23

Next to revenue generated by state taxes, the second-largest source of state revenue comes from

A) the Texas lottery.
B) gasoline taxes.
C) the federal government.
D) borrowing.
E) pollution taxes levied on the energy industry.

Question 24

What is the argument commonly used by supporters of a state income tax?

A) It will probably be quite regressive.
B) It is a fairer but highly unreliable source of revenue.
C) It makes Texas more attractive to businesses that are considering relocating from out of state.
D) It is not influenced by special interests.
E) It is a fairer and more reliable source of revenue.

Question 25

Authorized by voters in 1991, the Texas state lottery generates a sizeable sum for the state budget. Which of the following statements regarding the Texas lottery is true?

A) The lottery is played almost entirely by poor people.
B) The lottery is played almost entirely by the wealthy.
C) The lottery is played by large numbers of people from all social classes.
D) All Texans unanimously support the lottery.
E) The lottery is the sole source of funding for education in Texas.

Question 26

The Permanent University Fund was established in 1876 with a land grant of 1 million acres. It contributes to the support of

A) all institutions of higher education in Texas.
B) virtually all community colleges in Texas.
C) only institutions designated by the state legislative body.
D) the University of Texas and Texas A&M university systems.
E) all Texas educational institutions, regardless of size or need.

Question 27

Which statement concerning matching funds in Texas is true?

A) Texas has historically enjoyed relatively high matching fund participation.
B) Texas has historically participated in matching funds at a relatively low rate.
C) Texas has participated in matching funds more aggressively than most states have.
D) Texas has never participated in matching funds funding because of statewide disapproval of big government.
E) Matching funds have not been available to Texas since Reconstruction.

Question 28

The ________ is a dedicated fund established by the constitution for the support of public education in the state.

A) Permanent University Fund
B) Available School Fund
C) National Research University Fund
D) state lottery
E) Higher Education Fund

Question 29

The National Research University Fund was established through a constitutional amendment to provide a source of funding for

A) community colleges in poorly performing districts.
B) community colleges in primarily minority districts.
C) independent school districts who sought to reduce the dropout rate.
D) school tuition relief based on the high rate of tuition increases colleges were experiencing.
E) universities seeking to achieve national prominence as research institutions.

Question 30

The Economic Stabilization Fund is also known as the

A) Rainy Day Fund.
B) general revenue fund.
C) pay-as-you-go fund.
D) Enterprise Fund.
E) Patriot Fund.

Question 31

One significant component of the budget process that is relatively unique to Texas is

A) the constitutional mandate that Texas legislators write a budget every two years.
B) that, relative to other states, the rate of Texas employment and economic growth is extremely volatile.
C) a federal budget cycle that complicates the state budgeting process.
D) the unpredictability of natural disaster funding.
E) the governor's political agenda, which is influenced by election results.

Question 32

For universities to be eligible for the National Research University Fund they must meet at least all of the following criteria EXCEPT

A) maintain an endowment of at least $400 million in the two preceding academic years.
B) produce 200 Ph.D. degrees during the previous two years.
C) have a freshman class of high academic achievement.
D) have open enrollment for undergraduate students for 10 years.
E) have a demonstrable excellence in graduate education.

Question 33

If Texas instituted a progressive income tax,

A) low-income Texans would pay a lower tax rate than wealthy Texans.
B) low-income Texans, collectively, would contribute less to the state budget than wealthy Texans would.
C) wealthy Texans would pay at a lower tax rate.
D) people with lower incomes would pay at a higher tax rate.
E) poor homeowners and renters would pay taxes at higher rates.

Question 34

The Permanent School Fund distributes money to school districts across the state based on what two factors?

A) the number of schools in a district and student attendance
B) student attendance and guaranteed bonds issued by local school boards
C) the number of teachers and test scores
D) teacher availability to student ratio and test scores
E) income and ethnic composition of student body

Question 35

Texas will never have a personal income tax in the future because

A) Bullock proposed a constitutional amendment that effectively gave the electorate a veto over any proposal for an income tax.
B) Bullock vetoed a bill proposing a state income tax.
C) former governor John Connally and then-governor Ann Richards were against the idea.
D) county commissioners must approve the personal income tax amendment, which is unlikely.
E) the federal government must approve the personal income tax amendment, which is unlikely.

Question 36

The main purpose of the Permanent School Fund is to

A) buy textbooks for Texas children.
B) fund primary and secondary schools in the state.
C) fund universities and community colleges in the state.
D) fund the two main universities in Texas: the University of Texas and Texas A&M.
E) fund religious education in Texas.

Question 37

In addition to federal monies, which two other sources in recent years have had a major impact on monies flowing into the state budget?

A) the alcoholic beverage tax and utility tax
B) the inheritance tax and hotel tax
C) the cigarette and tobacco taxes and motor fuel tax
D) the oil production tax and natural gas production tax
E) the state lottery and the settlement the state reached with tobacco companies

Question 38

The Permanent School Fund was created in

A) 1854.
B) 1932.
C) 1996.
D) 2001.
E) 2010.

Question 39

Federal matching funds are

A) state monies going to support the federal government in its efforts to reduce the deficit.
B) awarded to states that agree to fund a federal program on behalf of their own citizens.
C) always distributed to states without any strings attached.
D) only awarded to states that have an income tax.
E) so small that they are an inconsequential part of state budget policy.

Question 40

Which of the following is at the heart of the budget process in Texas?

A) the lieutenant governor
B) the Texas Higher Education Coordination Board
C) the Texas comptroller
D) the Texas Education Commission
E) unions

Question 41

Much of the money in the state budget lies outside the direct control of the legislature.

Question 42

Federal expenditures play an important role in the Texas state budget.

Question 43

To address the budget shortfall in the 2012-2013 budget, the most common tactic used by the legislature was

A) raising tax rates.
B) borrowing from the federal government.
C) spending cuts.
D) a newly implemented income tax.
E) a brand-new source of revenue derived from underground fracking.

Question 44

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

A) rising interest rates that increased the cost of borrowing.
B) increasing health care costs due to recent efforts to reform the health care system.
C) underfunded state pension system.
D) rising salaries of teachers.
E) state's public unions threatening a strike.

Question 45

Texas is known as a high tax state; because of this, it is a good place to do business.

Question 46

Texas is one of a handful of states that does NOT have a state income tax.

Question 47

In addition to the state sales tax of 6.25 percent, county, city, and metropolitan transit authorities are allowed to impose an additional 2 percent sales tax.

Question 48

Nationally, what two factors caused the bubble in the real estate market?

A) high interest rates and high foreclosures
B) low interest rates and low foreclosures
C) low interest rates and loose credit standards
D) tight credit standards and low interest rates
E) adjustable rate mortgages and poorly constructed homes

Question 49

Which individual is NOT a key player in the budgetary process?

A) the comptroller of public accounts
B) the governor
C) the lieutenant governor
D) the land commissioner
E) the chairman of the House Committee on Ways and Means

Question 50

Which of the following statements is true?

A) During the 2011 legislative session, it became apparent that the booming state economy had dramatically increased state revenues.
B) The effects of the Great Recession did not reach Texas, as the state enjoyed surplus revenues.
C) The legislative session was particularly difficult because the Great Recession had significantly reduced state revenue.
D) The Texas legislature did not meet in 2011.
E) Resulting from the effects of the 2011 economic recession, the state budget deficit equals GDP.

Question 51

Texas maintains a balanced budget because the state constitution requires it.

Question 52

The purpose of the Biennial Revenue Estimate is to provide

A) a detailed forecast of total revenues that the state is expected to take in.
B) a detailed forecast of expenditures the state expects to be obligated for in the two-year budget cycle.
C) a detailed forecast of the estimated federal funds the state can expect to receive during the two-year budget cycle.
D) the governor a detailed estimate of the likelihood of a balanced budget during the two-year budget cycle.
E) the federal government a detailed estimate of the need for federal funds to balance the Texas budget.

Question 53

What action forced the legislature to bring the 2012-2013 state budget into balance?

A) The Texas Supreme Court ordered a balanced budget.
B) The Legislative Budget Board passed the balanced budget, but it was vetoed by the governor.
C) A special session of the Texas legislature voted for a balanced budget.
D) The comptroller filed a lawsuit against the governor and the legislature.
E) The federal government loaned Texas enough money to balance the Texas budget.

Question 54

Among the 50 states, Texas ranked forty-sixth on per capita state government expenditures.

Question 55

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

A) the governor.
B) the legislature.
C) the taxpayers.
D) special interests.
E) the courts.

Question 56

Texas's 6.25 percent sales tax is the tenth highest in the nation.

Question 57

When compared to the rest of the nation, the real estate collapse in Texas was

A) more severe.
B) less severe.
C) remedied by low property tax rates.
D) about the same as the national trend.
E) caused primarily by increased production of oil and natural gas.

Question 58

The Texas legislature increased ________ to help compensate for lower property tax revenues in the 2012-2013 budget cycle.

A) gasoline taxes
B) sales tax rates
C) income tax rates
D) state corporate franchise taxes and cigarette taxes
E) gasoline taxes and sales tax rates

Question 59

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.

A) 1
B) 15
C) 25
D) 40
E) There is no limit.

Question 60

From an overall standpoint, which statement is true?

A) The Texas economy is closely tied to the national economy.
B) The Texas economy is largely immune to the national economy.
C) The Texas economy is much larger than the national economy.
D) The Texas budget cycle effectively insulates the state economy from the rest of the world.
E) Oil and natural gas production within the state's borders generate over two-thirds of state tax revenue.

Question 61

Because of recent budget shortfalls, the state legislature will implement a state income tax effective in 2016.

Question 62

What happened when tuition and fees for Texas colleges were no longer controlled or mandated by the state legislature? Discuss the background conditions that led to this decision and how this impacted state funding for higher education.

Question 63

The Permanent University Trust Fund contributes to the support of all institutions in the University of Texas and Texas A&M university systems.

Question 64

Because the budget process in Texas operates on a two-year cycle, Texas legislators have adequate time to gather information, carefully analyze it, and craft a detailed and accurate state budget.

Question 65

The Texas economy is tied to the booms and busts of the national economy.

Question 66

The Legislative Budget Board plays an important role in the budget process in Texas.

Question 67

Under Texas's budgetary system, there is NO power to shift monies between agencies or programs when the legislature in NOT in session.

Question 68

The tax revenue projections of the Legislative Budget Board have been uniformly accurate regardless of changes in the economy in recent years.

Question 69

Discuss the major sources of state revenue in Texas and the major categories of state spending.

Question 70

The Texas Constitution prohibits all local governments from imposing additional sales taxes within their jurisdictions.

Question 71

When the Texas state lottery went before the voters in 1991, the vast majority of Texans voted to approve it.

Question 72

The Rainy Day Fund is more properly known as the National Research University Fund.

Question 73

The Legislative Budget Board's draft budget, NOT the governor's budget, is the one voted upon by the legislature.

Question 74

Discuss three of the five budgetary categories that are part of the budget process in Texas.

Question 75

In West Orange-Cove Consolidated ISD v. Neely, the Texas Supreme Court ruled that school districts had adequate discretion to set tax rates within their jurisdictions.

Question 76

Explain the strengths and weaknesses of the budgetary process in Texas.

Question 77

The single most important source of revenue for state government in Texas is the property tax.

Question 78

It is common for the governor to call a special session of the legislature to deal with budget issues.

Question 79

Can Texas control spending when citizens are reluctant to see so many services cut?

Question 80

What is the appropriate use of the state's Rainy Day Fund, if NOT the economic recession the state and the nation have been experiencing since 2008?