Sources of Funding & Revenues (Weeks 1-2) Flashcards
Includes sources of local, state, and federal revenue and spending and introduction to budget constraint lines and indifference curves
Total amount of taxes, fees, and other sources of money a government receives in a given year
Revenues
Total amount by which a government’s spending exceeds its revenues in a given year
Deficit
Is a deficit a flow or stock
Flow
Total amount of money paid out by a government in a given year
Spending
When the government collects more money than it spends
Surplus
The amount that a government owes to those who have loaned it money
Debt
Is debt a flow or a stock
Stock
When the amount the government spends equals the amount the government collects in a given year
Balanced budget
Prices stated relative to a chosen year
Real prices
Prices stated in today’s dollars
Nominal prices
Measure of the average change over time in the prices paid by urban consumers for a market basket of consumer foods and services
Consumer price index
Formula for converting real and nominal prices
real = nominal x (target year CPI / original year CPI)
The percentage change in the price index from the proceding period
Inflation rate
Inflation rate formula
inflation rate = (current CPI – previous CPI / previous CPI) x 100
A tax levied to fund social insurance programs on earnings from work
Payroll tax
Is the payroll tax a flat or progressive rate? Who pays?
Flat rate
Paid by both employers and employees on all earnings from work
Is the individual income tax a flat or progressive rate? Who pays?
Progressive rate
Paid for by employees on all sources of income
What are the three spending areas of the federal budget?
Entitlement or mandatory spending
Discretionary spending or optional
Interest on debt
Is Medicare an insurance or assistance program? State or federal?
Insurance
Federal program
Is Medicaid an insurance or assistance program? State or federal?
Assistance
Joint state and federal program
What population does Medicare serve?
People over 65 no matter income;
Younger disabled people or dialysis patients
What population does Medicaid serve?
All ages of low income
When is the federal fiscal year?
October 1 of one year to September 30 of the next year
Programs that help individuals and families whose incomes and/or assets fall below a pre-determined threshold, such as the poverty level
Means-tested entitlements
What are the two main categories of means-tested entitlements?
Health programs (medicaid, medicare, CHIP, ACA)
Income security programs (SNAP, WIC, SSI, EITC, CTC)
Constitutional requirements or statutory rules that prohibit states from spending more than they collect in revenue
Balanced budget requirements
What are the two main revenue sources for the federal government?
Income tax
Payroll tax
What are the three main sources of spending for the federal government?
Mandatory spending
Discretionary spending
Interest on debt
What is the difference between mandatory spending and discretionary spending?
Mandatory spending is determined by the # of eligible individuals and discretionary spending is determined by the appropriation bills passed by congress
What are the two main sources of revenues for state governments?
Taxation (general sales tax and income tax)
Federal transfers (medicaid)
What is the main source of spending for state governments?
Public welfare (any means tested program)
What are the two main sources of revenue for local governments?
Property tax and sales tax
State and federal transfers
What is the main source of spending for local governments?
K-12 education
Does KY create a biennial budget in even or odd years?
Even
Is KY’s General Assembly required to pass a balanced budget requirement?
Yes
What is Kentucky’s fiscal year?
July 1 one year to June 30 the following year
What type of budget provides funds for all the programs and services of state government? It finances the day-to-day spending?
Operating budget
What type of budget provides funds for capital investments such as buildings, information technology systems, and major items of equipment?
Capital budget
Which fund is funded by most of the state’s tax revenue?
General fund
Which fund is funded by agency funds such as license fees, tuition, and other charges for services?
Restricted fund
Which fund is funded by moneys received from the federal government for specified purposes?
Federal fund
Which fund is funded by gas tax receipts, sales tax on automobiles, etc.
Road fund
Which programs does payroll tax pay into?
Social Security
Hospital insurance portion of Medicare (Medicare Part A)
