1. Chapter 13 – Budget, Finances, and Policy

2. Learning Objectives
13.1 Distinguish the types of taxes and revenue sources
13.2 Identify alternative sources of revenue and funds
13.3 Outline the state budget cycle

3. Taxes and Other Revenue Sources
Sales Tax
Regressive tax
Property Tax
Homestead exemption
Franchise (Business) Tax
Oil and Natural Gas Taxes
Car Taxes: Motor Fuel Tax (“Gas” tax) and Motor Vehicle Taxes
Sin Taxes

4. Alternative Sources of Funds
Fees and Fines
The Rainy Day and Other Funds
Why No Income Tax
Progressive Tax
Debates Over Taxes

5. The Budget General Revenue Funds Budget Cycle Budget Limitations
Pay as You Go
Texas cannot spend more money than it receives in revenue
The Spending Cap
Dedicated and Nondedicated Revenue
Expenditures: amount of funds state government can spend

6. The Budget Budget Players and Process Dual Budgeting
legislative and executive branch coordinate for budget
Can We Afford this?
Fiscal note: overview of estimated financial impact
What is Our Vision
Appropriation bill: legislation showing state spending
Who Has Input?
How are Requests Evaluated?

7. The Budget Budget Players and Process Budget Tricks
Can the Package Pass?
Does the Budget Square with Available Fund?
Certify: state comptroller states the state has enough money for budget
How is the Budget Executed?
Rider: specific policy directives that convey instructions on how agency funds can be collected or spent
Budget Tricks
Deferrals: delay in guaranteed payment in one budget cycle to another budget cycle

8. Texas Takeaways
A regressive tax, like the state’s sales tax, is a tax rate that is the same for everyone
The homestead exemption is part of a homeowner’s property value on which Texans don’t have to pay taxes
The gas tax has remained unchanged since 1991
The state established the Economic Stabilization Fund (ESF), referred to as the “Rainy Day Fund,” with voter approval in 1988

9. Texas Takeaways
A progressive tax is defined as the more a person earns, the more a person pays
Pay as you go, the spending caps on debt spending, and revenue already dedicated to a specific policy (dedicated revenue) are all budget limitations
The dual budgeting process is where the legislative branch and executive branch coordinate to propose, shape, and pass a biennial budget