Chapter 12 The State Economy and the Financing of State Government Flashcards
Fiscal Year
The budget year for a government or a corporation; it may coincide with a calendar year
Inflation
A rise in the general price level, which is the same thing as a fall in the value of the dollar
Elasticity
The flexibility and breadth of the tax system so that the state revenues are not seriously disrupted even if one segment of the economy is troubled
Categorical Grants-in-aid
Federal funds that can be used only for specific purposes
General Revenue Sharing
A federal program that allowed state and local governments great flexibility in the use of federal funds. It expired in 1986
Block Grants
Federal funds that can be used for a broad range of programs; the state or local government recipient can determine specific uses within broad guidelines
User Fee
A fee for a specific governmental service charged to the person who benefits from the service; college tuition is a user fee
Tax equity
The inherent fairness of a tax. As the term is used in this book, ability to pay is a factor in fairness
Revenue Shortfall
A situation in which state revenues are not expected to be adequate to fund programs and services at current levels
Progressive Taxation
A tax system based on ability to pay that requires wealthy people to pay taxes at a higher rate than poor one
Regressive Tax
A flat-rate tax that is not based on ability to pay; as a consequence, the poorer the payer of the tax, the larger the percentage of income that goes to the tax
Privatizing
Turning over public programs to the private sector to implement. For example, the state contracts with a private firm to operate some Texas prisons
Dual-Budgeting System
A system in which both the executive branch and the legislative branch prepare separate budget documents
