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

Question 1

The state comptroller is responsible for tax collection,investments,and the safeguarding of public funds.

Answer 1

True

Question 2

A severance tax is a tax on goods manufactured in Texas but sold in other states.

Answer 2

False

Question 3

A tax system based primarily on income taxes puts a disproportionately high taxpaying burden on those least able to pay.

Answer 3

False

Question 4

Taxes may be collected not only for the purpose of funding the programs of government,but to regulate the behavior of individuals and/or organizations as well.

Question 5

Texas received a four star rating for the adequacy of its revenue to fund government and for the fairness of the system to taxpayers.

Question 6

Texas no longer relies heavily on the general sales tax and other forms of sales taxes because the results of those types of taxes create a disproportionately high tax burden on poor and middle-income taxpayers and an unevenness of the tax burden among different types of businesses.

Question 7

Texas has a dual-budgeting system.

Question 8

When adjusted for inflation and population growth,the Texas budget has been relatively flat between 1990 and 2011.

Question 9

Texas has a progressive tax system.

Question 10

A regressive tax falls disproportionately heavy on people with low incomes.

Question 11

Texas has an economic output roughly the size of Russia.

Question 12

The deep national recession of 2007-2009 fell more heavily on Texas than it did on the rest of the United States.

Question 13

Because the Texas tax structure lacks elasticity,it does not provide easy adjustments to the ups and downs in the economy.

Question 14

Sin taxes are based on the philosophy that those who subject their bodies to the damaging effects of a product may be discouraged from doing so by paying a tax on the product.

Question 15

The major tax in Texas levied on business is called the excise tax.

Question 16

Categorical grants from the national government can be spent only for specific programs.

Question 17

Taxes paid by businesses account for three times the taxes individuals pay.

Question 18

State government indebtedness is highly restricted in Texas because the framers of the Texas Constitution strongly believed in a "pay-as-you-go" system of government.

Question 19

Over half of Texas's income comes from nontax sources.

Question 20

Severance taxes and the corporation franchise tax are taxes levied on business in Texas.

Question 21

The largest single category of state spending for the 2012-2013 biennium in Texas was health and human services.

Question 22

Texas state universities all use the same fixed rate tuition schedule.

Question 23

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

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

Question 24

The purpose of the Budgeting,Planning,and Policy Division is to provide staff assistance for the Legislative Budget Board.

Question 25

Which of the 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

Question 26

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 such as cigarettes and the Texas Lottery.

Question 27

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

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

Question 28

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 29

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

A) Food sold in grocery stores
B) Food sold in restaurants
C) Over-the-counter drugs
D) Books
E) Clothing

Question 30

Which of the following accounts for 56 percent of state tax state revenues?

A) Motor fuels tax
B) Sales tax
C) Business franchise tax
D) Income taxes
E) State property taxes

Question 31

Which of the following statements regarding the revenue structure of Texas is incorrect?

A) Businesses pay about fifteen 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 32

Which of the following officials serves as the state's tax collector?

A) Attorney General
B) Treasurer
C) Comptroller
D) Secretary of State
E) Auditor

Question 33

Which of the following types of federal grants could be used only for programs specified in the grant?

A) Categorical grants-in-aid
B) General revenue sharing
C) Block grants
D) Community development grants
E) Federal mandates

Question 34

The three committees of the legislature with primary responsibility for budgeting and appropriating are the House Ways and Means Committee,the House Appropriations Committee,and the Senate Finance Committee.

Question 35

Block grants

A) allow expenditures only for specific programs.
B) are distributed to state governments for whatever projects they wish.
C) are distributed to local governments for whatever projects they wish.
D) are given by the state governments to local governments to be spent on economic development projects.
E) are distributed to states for broad programs.

Question 36

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.

Question 37

Which of the following 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 38

Because the framers of the state constitution believed in "pay-as-you-go" government,emergency borrowing by the state must be approved by

A) a two-thirds majority vote of the legislature.
B) a four-fifths majority vote of the legislature.
C) the governor, the lieutenant governor, and the speaker of the House.
D) the governor, the treasurer, and the comptroller of public accounts.
E) the lieutenant governor, the speaker of the House, and the treasurer.

Question 39

The budget prepared by the Legislative Budget Board and the version prepared by the governor's staff may express different political perspectives but they both tend to be incremental.

Question 40

The term for increases in what things cost in an economy can be termed

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

Question 41

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 42

Texas ranked ____ among the fifty states in per capita expenditures for welfare services.

A) second
B) tenth
C) twenty-sixth
D) thirty-seventh
E) forty-eighth

Question 43

Discuss the advantages and disadvantages of each of the following types of taxes: general sales tax,motor fuels tax,excise tax,and tobacco tax.Explain which is the most important for Texas politics and why.

Question 44

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 45

Discuss the likelihood that Texas will adopt a personal income tax in the near future.Explain the state's reluctance to consider an income tax and the factors that might make the adoption of an income tax more likely now than in the past.

Question 46

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 47

Which of the following types 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 48

The second-largest functional category of state spending in Texas is

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

Question 49

Discuss the difference between a progressive and a regressive system of taxation.Explain how Texas's tax system functions with regard to progressivity and regressivity.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 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

Explain why Texas often has had problems generating adequate revenues to support state programs in recent years.Explain how the state has responded to the problems of revenue shortfalls.Propose a solution to the potential future problems of government revenue.

Question 52

The taxes Texas levies on 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 53

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 54

The largest single functional category of state spending in Texas is

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

Question 55

About ____ percent of the $40 billion state budget for health and human services is funded by the national government.

A) 10
B) 20
C) 40
D) 60
E) 80