The Budget

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The Budget Powered By Docstoc
					The Budget
The Budget
 Budget is passed to make sure that
  government has means to provide services
  to the citizens
 Appropriations bill establishes expenditures
  for the biennium
 State provides for what taxes can be levied
  and who can use them
The Budget Process
 Texas uses a biennial (2-year) budget, with
  a fiscal year beginning each September 1st
 While the governor does not control the
  budget, he or she can influence the process
 If March of even-numbered years, both the
  Legislative Budget Board (LBB) and the
  Office of Budget and Planning (OBP)
  request budget submissions from state
The Budget Process
 OBP produces governor’s budget which
  reflects his or her priorities, and is usually
  introduced by a “friendly” legislator
 The LBB prepares a budget which is the
  one usually used
 Several budget bills covering different state
  agencies may be presented and passed
The Budget Process
   Once the budget bills have been passed
    (which is often late in the session) the
    governor may take one of four actions:
      Veto one or more of the bills

      Use a line item veto

      Allow the bill to take effect without
      Sign the bill
The Budget Process
   The courts rarely intervene in budget
    matters, although some taxes or
    expenditures have been declared
   Top four areas of expenditures, in order of
    magnitude, are:
     Education

     Health and human services

     Transportation (highways)

     Public safety
 Elementary and high schools receive
  approximately 60% of the education budget
 Balance is distributed among higher ed
 About 39% of total budget is education-
 When matched with local funding, more
  than $40 billion is spent annually
Health and Human Services
 More than $24 billion is spent annually for
  a wide variety of programs
 Comes in a close second to education (35%)
 Almost 50% of the expenditures come from
  federal funds
 About 9% of the budget is spent here
 Most comes from fuel taxes we pay at the
  pump – 75% of the taxes are spent directly
  on highways
 Funds for alternative methods (light rail,
  etc.) of transportation must come from
  general fund
Public Safety and Corrections
 Texas’s prison population is the largest
 6% of the budget total is devoted to
Sources of Revenue
   Non-tax revenue
     Intergovernmental transfers are funds
      received from other governmental units
     Grants-in-aid make up the greatest
      amount of such transfers
     Presently, about 35% of state revenues
      come from the federal government (more
      than one-half of which is for health and
      human services)
Sources of Revenue
   Non-tax revenue
     License and user fees are received by
      those using services and benefits
     License fees are also generated for the
      privilege of doing business, such as
      attorneys, CPA’s, physicians
     Borrowing is permitted through bond
Sources of Revenue
   Non-tax revenues
     Lottery proceeds were originally intended

      to help fund education, but it is now part
     Rents and royalties are collected from

      natural resources and from leases on state
Sources of Revenue
   Tax Revenues
     Various state taxes make up about one-

      half of the revenue received each year
     “Sales tax” accounts for about 55% of

      total tax receipts, but other “sales-type”
      taxes contribute to make up over 80% of
      the revenues
Sources of Revenue
   Types of Taxes
     General sales tax is set at 6.25% but has

      some exemptions
     Property taxes are collected by local

      governments and schools
     Excise taxes (“sin” taxes) are levied on
      such things as tobacco and alcohol
Sources of Revenue
   Types of Taxes
     Franchise taxes are levied on
      corporations doing business in Texas and
      are based on profits or net worth – not
      levied on other types of business
     Severance taxes come from removal of
      natural resources
Evaluating Tax Systems
 Tax systems are the mix of revenue-raising
  methods used by governments
 Texas’ system of sales tax is criticized
  because it does not fully exempt daily needs
 Also criticized as being regressive, which
  means burden is more heavily weighted to
  low-income persons
What’s Up for the Future?
   There is impetus to have the franchise tax
    applicable to all businesses
   Income tax idea was floated by Lt. Gov. Bullock
    in the 90’s, which was met with strong resistance
   Constitutional amendment was passed to require
    voter approval of income tax
   Income tax would permit taxpayers to deduct on
    federal returns, and would possibly create more

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