Pretest

Question 1

T or F, the corporate income tax is the second largest source of local revenue for the federal government.

Answer 1

False

Question 2

Which of the following is a logical reason for a state to implement a lottery as a way to increase state revenue?

Answer 2

Lotteries are a way for the state to receive money from its citizens without levying a tax.

Question 3

Local government expenditure is dominated by:

Answer 3

Elementary and secondary education

Question 4

Which of the following represents the largest expense for state governments?

Answer 4

Public welfare programs

Question 5

Which of the following is a unit excise tax?

Answer 5

The 12 cents per gallon Indiana beer tax.

Question 6

Which of the following distinctions separates government user charges from taxes?

Answer 6

Taxes are collected by coercion; user charges are proceeds from voluntary exchange.

Question 7

Which of the following is a special problem associated with line-item budget systems?

Answer 7

The answer is none of the above: line-item budgets are not complex and officials prefer that format because of its simplicity; the format is all about making it easy for agencies to purchase their inputs at the expense of not showing what was the outcome or result of their use of the inputs; and line-item budgets are the least expensive to prepare because it doesn’t require special technical expertise and there is less time involved in the preparation of a line-item budget than any other format.

Question 8

The budget process which emphasizes the achievement of goals and competition between alternatives is:

Answer 8

The correct answer is program budgeting. Agencies that use program budgeting first define their goals and objectives. They then classify the organizational activities that should contribute to each set goal. The agencies then emphasize the achievements of goals and the identification of competing alternatives* by grouping activities according to their end products (outputs and outcomes) regardless of the agencies’ functions. So, if the goal of an agency is to ensure public safety, it doesn’t matter which department is responsible for this goal. Surely, the police and the fire departments have to coordinate and in some cases compete for resources, but the budget analyst only focuses on those activities and end products (outputs and outcomes) that better achieve the public safety goal.

• Competing alternatives is illustrated by the following question : If we fund lighting for baseball fields what are we not funding and what makes more economic sense given the agency’s goals?