Deck 12: The State Economy and the Financing of State Government

Question 1

​The effect of pari-mutuel betting and the lottery has been _____.

A)​that they have not been major sources of revenue for state government
B)​that they have raised significant percentages of money for state government
C)​limited, as they have been found to be unconstitutional
D)​that they have far exceeded revenue expectations
E)​that they have raised significant percentages of money for state government and have far exceeded revenue expectations

Answer 1

A

Question 2

Which of these five major revenue funds in Texas supports the majority of state programs?

A)State Highway Fund
B)Highway Motor Fuel Fund
C)Available School Fund
D)Omnibus Tax Clearance Fund
E)General Revenue Fund

Answer 2

E

Question 3

The Texas economy is shifting from one based on natural resources to one based on _____.

A)manufacturing
B)the banking industry
C)information and technology
D)federal grants
E)sports teams

Answer 3

C

Question 4

Which statement regarding the revenue structure of Texas is not true?

A)Businesses pay about 15 percent of the total tax revenue.
B)The general sales tax in Texas is assessed at 6.25 percent on goods and services.
C)Texas has one of the most regressive tax structures in the nation.
D)Heavy reliance on sales taxes gives Texas a very elastic revenue structure.
E)The tax system puts an undue burden on those least able to pay.

Question 5

A _____ year is the budget year for a government or corporation.​

A)​financial
B)​fiscal
C)​economic
D)​spending
E)​debt

Question 6

What term is used to describe increases in what things cost in an economy?

A)recession
B)depression
C)progressive taxation
D)inflation
E)regressive taxation

Question 7

​Which statement about state university tuition in Texas is not true?

A)​State policymakers wanted college students to pay a higher proportion of the costs of their education.
B)​Tuition and fees at state universities in Texas is 100 times the rate they were thirty years ago.
C)​The lottery in Texas keeps college tuition affordable.
D)​Tuition increases are part of a state pattern of increasing user fees.
E)​Tuition for graduate school and for out-of-state students is now much higher.

Question 8

Tax equity refers to ​_____.

A)​property taxes on homes
B)​the idea that taxes should be fair
C)​tax elasticity
D)​an 8.25 percentsales taxes on goods
E)​excise taxes

Question 9

Because the tax system in Texas is not easily adjusted to ups and downs in the economy,it is said to _____.

A)be recession-driven
B)be inflation-driven
C)lack progressivity
D)lack regressivity
E)lack elasticity

Question 10

Because the framers of the state constitution believed in "pay-as-you-go" government,_____.

A)state government borrowing is highly restricted
B)emergency borrowing by the state must be approved by a four-fifths majority vote of the legislature
C)the governor, the lieutenant governor, and the speaker of the House can authorize limited borrowing
D)state government borrowing is highly restricted; and emergency borrowing by the state must be approved by a four-fifths majority vote of the legislature
E)state government borrowing is highly restricted;emergency borrowing by the state must be approved by a four-fifths majority vote of the legislature; and the governor, the lieutenant governor, and the speaker of the House can authorize limited borrowing

Question 11

Which statement about the state of Texas's relationship with federal funding is true?​

A)​Federal grants are the largest nontax source of money for the state government of Texas.
B)​Almost 40 percent of the total state revenues come from the federal government.
C)​State government in Texas has at times failed to take advantage of federal money because it would require the state to also spend money.
D)​The state government is concerned that the costs of meeting federal requirements might exceed the amount of money provided by the federal government.
E)All of these statements are true.

Question 12

Which statement about block grants is true?

A)They allow expenditures only for specific programs.
B)Block grants are distributed to state governments for whatever projects they wish to pursue.
C)They are distributed to local governments for whatever projects they wish to pursue.
D)Block grants aregiven bystate governments to local governments to be spent on economic development projects.
E)Such grants are distributed to states for broad programs.

Question 13

​The two most significant problems with the tax system in Texasare _____.

A)​fairness and the lack of elasticity
B)​its focus on personal and corporate income taxes
C)​its overreliance on state property taxes and borrowing
D)​its overtaxing of businesses both large and small
E)​all of these

Question 14

Why are revenue shortfallssuch a problem for the Texas tax system?

A)The state relies too much on sales taxes.
B)​When the economy is weak, people stop buying and thus stop paying sales taxes.
C)​The system relies heavily on spending by low- and middle-class individuals.
D)​All of these are reasons for revenue shortfalls.
E)​None of these is a reason for revenue shortfalls.

Question 15

Which type of federal grant could be used only for programs specified in the grant?

A)categorical grant-in-aid
B)general revenue sharing
C)block grant
D)community development grant
E)federal mandate

Question 16

​Revenue taxes are designed to _____,while regulatory taxes are designed to _____.

A)​raise governmental income for the state; ​raise governmental income for the federal government
B)​be income taxes; be user fees
C)​be fair; be a punishment
D)​raise government income; punish undesired behavior or reward desired behavior
E)​be easy to raise; be hard to raise

Question 17

​Which statementabout the Texas economy is not true?

A)​The economic distance between highly skilled and unskilled workers is growing.
B)​State policymakers expanded the Texas economy by creating a strong educational system.
C)​The Texas economy has been characterized as a "boom and bust" economy.
D)​Many of the jobs created in Texas are minimum-wage jobs.
E)​Texas's tax structure is favorable for the business community.

Question 18

Which official serves as the state's tax collector?

A)attorney general
B)treasurer
C)comptroller
D)secretary of state
E)auditor

Question 19

​A fee for a specific government service charged to the person who benefits from the service is _____.

A)​exemplified by the sales tax
B)​exemplified by federal funding
C)​called a user fee
D)​called pari-mutuel betting
E)​all of these

Question 20

In 1991,in order to increase state revenue,voters in Texas approved _____.

A)a state general sales tax
B)charging tuition for the first time for students to attend state universities
C)the Texas income tax
D)the Texas lottery
E)high cigarette and alcohol taxes

Question 21

​In Texas,property taxes _____.

A)​have been collected by the state government since 1982
B)​are used to fund local governments, not the state government
C)​do not exist
D)​make up a significant percentage of state revenues
E)​have been collected by the state government since 1982 and make up a significant percentage of state revenues

Question 22

​When the state of Texas contracts with a private company to build and run prisons in Texas,this is an example of _____.

A)​moralistic culture
B)​competition among governments
C)​performance review
D)​privatization
E)​changing the state's tax structure

Question 23

Which of these is an example of a progressive tax?

A)motor fuels tax
B)federal income tax
C)oil and gas production tax
D)general sales tax
E)cigarette tax

Question 24

​Which strategy has the state of Texas pursued to find adequate revenue sources?

A)​performance evaluation and management such as the Texas Performance Review
B)​privatizing services by contracting them out to businesses
C)​passing along costs to private citizens
D)​changing the revenue structure
E)​all of these

Question 25

​In order for tax restructuring to occur in Texas,_____.

A)​the public would have to be more accepting of a state income tax
B)​businesses would have to accept an activity tax like a corporate income tax
C)​state politics and attitudes would have to change
D)​regular revenue shortfalls would have to end and taxes would have to be more elastic
E)​all of these

Question 26

Which statement about Texas's tax system is true?

A)The ​state relies on sales taxes rather than personal income taxes.
B)Poorer residents pay a higher percentage of their income in taxes than wealthier residents do.
C)Sales taxes account for a larger percentage of state revenues than do business taxes.
D)​State taxes are primarily regressive in nature.
E)All of these statements are true.

Question 27

Which type of tax does Texas not have?

A)motor fuels tax
B)personal income tax
C)inheritance tax
D)general sales tax
E)severance tax

Question 28

The overall tax system in Texas _____.

A)falls much more heavily on the rich than on the poor
B)falls more heavily on the middle class than either the rich or poor
C)relies on pay-as-you-go taxes that are equitable to all groups
D)falls disproportionately on poor and middle income earners
E)is financed by voluntary taxes such as sin taxes on optional items like cigarettes and the Texas Lottery

Question 29

​Which statement is an argument in support of a state income tax for Texas?

A)​Texas does fine except when the economy is in an economic slump.
B)​It is fair for poor people to pay a higher percentage of their income in taxes because they demand more government services.
C)​Our current tax system attracts new businesses to Texas that might not come if we had a state income tax.
D)​Income taxes would create a more progressive tax system.
E)​A state income tax would require a constitutional amendment, which would be unlikely.

Question 30

Which of these is exempt from the general sales tax in Texas?

A)most food sold in grocery stores
B)food sold in restaurants
C)over-the-counter drugs
D)books
E)clothing

Question 31

Which statement aboutthe dual-budgeting system in Texas is not true?

A)Both the legislative and executive branches prepare separate budget documents.
B)"Dual budgeting" refers to the budget committees of both the House and the Senate.
C)It is ​is wasteful but allows different political perspectives to be heard.
D)It ​tends to take an incremental approach.
E)​It outlines state expenditures for a two-year period.

Question 32

A _____ tax is a tax levied on the removal of natural resources (especially oil and gas)from the earth.

A)franchise
B)property
C)corporate income
D)severance
E)motor fuels

Question 33

Which of these accounts for 56 percent of state taxrevenues?

A)motor fuels tax
B)general sales tax
C)business franchise tax
D)income taxes
E)state property taxes

Question 34

​Which characterization of the Texas system of taxation is not accurate?

A)​The business franchise (margins) tax in Texas is a significant burden on the business community and has raised far more money for the state than expected.
B)​Texas has no personal income tax and no true corporate income tax.
C)Texas tax policy reflects its individualistic and traditionalistic political cultures.
D)Texas taxes place a heavier burden on low- and middle-income families than on businesses or the wealthy.
E)​Texas overrelies on sales taxes.

Question 35

​When your classmate Paula bought a new dress,she paid 8.25 percent in sales taxes.Where does that tax money go?

A)​​It is split between school districts and the state of Texas.
B)All 8.25 percent goes to the state of Texas.
C)The state of Texas gets 6.25 percent, city governments collect 1 percent, and mass transit districts or county economic development districts receive 1 percent.
D)​It is split between the state and federal governments.
E)​It is split between the state and county governments, with the state getting 6.25 percent and the counties getting 2 percent.

Question 36

The two state agencies that play a major role in the initial formulation of the budget are the Budget,Planning,and Policy Division and the _____.

A)Legislative Budget Board
B)Legislative Reference Service
C)General Accounting Office
D)Comptroller's Office
E)Treasurer's Office

Question 37

The taxes Texas levies on specific items like tobacco products,alcoholic beverages,and gasoline are known as _____ taxes.

A)corporation franchise
B)general sales
C)excise or selective sales
D)gross receipts
E)severance

Question 38

​Which statementabout progressive taxation is not true?

A)​Texas has a highly progressive tax system.
B)​The federal income tax is an example of progressive taxation.
C)​Texas has passed a constitutional amendment making a progressive income tax very difficult to create.
D)​Progressive taxation is where the rate of taxation goes up as income goes up.
E)​Progressive taxation is also known as an "ability to pay" tax.

Question 39

​Most of the money generated by the motor fuels (gas and diesel fuel)tax in Texas _____.

A)​is paid by businesses
B)​funds health and human services
C)​produces an exact ratio of benefits paid and benefits received
D)​is spent on maintaining and building highways and roads
E)​all of these

Question 40

The best example of Texas's reliance on regressive taxes is the _____.

A)general retail sales tax
B)inheritance tax
C)income tax
D)corporate income tax
E)property tax

Question 41

Describe the process of budgeting and appropriating funds for government programs in Texas.Discuss the advantages and disadvantages of the dual-budgeting system as it operates in Texas.

Question 42

​Your text states that rather than developing public policy and then seeking ways to fund services,Texas creates a budget and then funds services.How do you think Texas would be different if it chose its public policies first and provided funding second?

Question 43

Since 1977,the percentage of money spent by the state on highway expenditures has _____.

A)increased dramatically, as aging highways have needed to be replaced
B)increased, but only narrowly
C)remained almost exactly the same
D)declined, but only narrowly
E)declined dramatically, resulting in the state having many poorly maintained roads

Question 44

​Upon what types of taxes does Texas most rely?Are these taxes regressive or progressive?Explain.

Question 45

Explain the difference between a progressive and a regressive system of taxation.How does Texas's tax system function with regard to progressivity and regressivity? Are taxes in Texas fair? Describe what changes,if any,you would recommend be made to Texas's system in order to improve it from the standpoint of fairness.

Question 46

Which of these is not a source of power for the governor when dealing with the budget?​

A)​the line-item veto
B)​the preparation of his or her own budget separate from that of the LBB
C)​the election of legislators who share his or her budget philosophy
D)​the ability to restore funding that the legislature has cut
E)​none of these, since all are sources of budget power for the governor

Question 47

What is the largest single functional category of state spending in Texas?

A)health and human services
B)general government
C)education
D)public safety and corrections
E)business and economic development

Question 48

What is the second-largest functional category of state spending in Texas?

A)health and human services
B)general government
C)education
D)public safety and corrections
E)business and economic development

Question 49

​What tools does the governor have for dealing with the state's budget?

Question 50

The legislative appointee responsible for monitoring the expenditures of state agencies is the _____.

A)state comptroller
B)state treasurer
C)state auditor
D)secretary of state
E)attorney general

Question 51

​What is tax elasticity?How does Texas's lack of tax elasticity create problems for budgeting in Texas?

Question 52

​According to the chart comparing Texas's expenditures to those of other states,which of these statements is true?

A)​Texas spends more per person on state services than most other states do.
B)​Texas spends about the same per person on state services as other states do.
C)​Texas, on average, ranks at the bottom of states' spending per person.
D)​Texas ranks relatively high in education spending when comparing per person state spending.
E)Texas spends about the same per person on state services as other states do, although it ranks relatively high in education spending when comparing per person state spending.

Question 53

​When analyzing health and human services spending by the state of Texas,which of these is not true?

A)​Almost 60 percent of Texas health and human services funding comes from the federal government.
B)​Texas ranks high in comparison to other states in per person spending on health and human services.
C)​Health and human services is the second-largest segment of the state budget.
D)​Texas tends to cut health and human services first when the budget is tight.
E)Texas ranked forty-first among the fifty states in per capita expenditures for welfare services and twenty-sixth in hospital services.

Question 54

Discuss the likelihood that Texas will adopt a personal income tax in the near future.What are the arguments for and against the state's adoption of a personal income tax?

Question 55

​In budget discussions,a source of power for the comptroller is _____.

A)​his or her power to line-item veto the budget
B)​the biennial session
C)​that the comptroller must certify that expected revenues are sufficient to fund expenditures
D)his or her participation in LBB budget choices about expenditures
E)​all of these

Question 56

​Explain why your text characterizes the Texas economy as a "boom and bust" economy.What are the consequences of this type of economyfor taxing and spending in Texas?

Question 57

​What types of taxes does the state of Texas lack?Why do you think this is the case?

Question 58

​Which of these is not a major area of state spending in Texas?

A)​education
B)​health and human services
C)natural resources
D)​public safety/criminal justice
E)​business and economic development

Question 59

In what ways would you consider Texas's taxing and spending system to be "democratic"?In what ways would you consider it to be "undemocratic"?

Question 60

​In the authorization and appropriations stage of budgeting,_____.

A)​there isinput from the governor's staff, agency representatives, interest groups, and private citizens
B)the budget ​reflects the power of interest groups
C)​committee members bargain, compromise, and trade votes
D)​past campaign contributions begin to pay off in budgeting decisions
E)​all of these

Question 61

Cross-Chapter Essay Question (Chapters 1 and 12): Explain how Texas's taxing and spending system reflects its individualistic and traditionalistic political cultures.Give examples to support your explanations.

Question 62

Cross-Chapter Essay Question (Chapters 10,12,and 13): To what extent are Texas's problems in education tied to the state's system of taxing and spending?Explain.Be sure to discuss education as a civil right,the current state of education in the state,and how education is funded in Texas (including local versus state taxes).