State Budgets

Question 1

Who prepared the budget? who approves it?

Answer 1

prepared by executive
approved by legislature

Question 2

What kind of game is budgeting?

Answer 2

zero-sum game
means a gain for one side is a loss for the other

Question 3

Budget Terms: Revenue & Expenditures

Answer 3

REVENUE: Income received by gov’t
* Much (but not all) from taxes
EXPENDITURES: Goods & services purchased or provided with government funds
*Many (but not all) are public goods
* Market is often unwilling or unable to provide
* e.g. national defense, public order, parks
*Some are (also) merit goods
* Society holds these shouldn’t be denied based on ability to pay
* e.g. education

Question 4

Types of Expenditures

Answer 4

EARMARKED funds:
* Certain revenues reserved for certain programs (by constitution or by statute)
* e.g. Lotto $$$  Education
GENERAL FUND:
* Appropriation & expenditure not earmarked for separate accounting
* The “discretionary” part of spending
UNCONTROLLABLES:
* Funds already committed
* Pre-existing commitments, entitlement programs, & federal mandates

Question 5

Uncontrollable/Mandatory spending for the federal gov’t

Answer 5

Interest on nat’l debt
Social security & other income entitlements
Healthcare entitlements

Question 6

Federal gov’t discretionary spending

Answer 6

Defense
Non-defense domestic

Question 7

What does “balanced budget” really mean?

Answer 7

it can:
be wrong
be incomplete
use accounting tricks (deferrals, underpayments, and messing with timeframes)
shift money
so… balanced budget doesn’t mean no debt (Tx has ~63.21B in state debt)

Question 8

State budgetary process

Answer 8

1. governor/budget office
   estimate revenue & provide budget instructions to departments
2. Departments agencies
   prepare plans, prepare legislative budget requests, prepare capital improvement plan
3. governor/budget office
   Review/analyze, hold public hearings, make recommendations
4. Legislature
   Prepare appropriations act, review recommendations and review/analyze/revise budget, pass Appropriations act by both houses
5. Governor
   review/analyze changes (can line-item veto), sign into law

Question 9

Texas budget info

Answer 9

has BIENNIAL (2-year) budget cycle
One of only 4 states w/ both a biennial legislative session & biennial budget cycle
This means:
Must estimate revenues & appropriate funds for two years instead of one!
* Economic conditions can change, causing revenue windfall or shortfall

Question 10

What is Texas Economic Stabilization Fund (ESF)

Answer 10

it’s a “rainy day” fund,made from oil & gas taxes as well as sales tax
This helps to avid painful cuts in shortfalls and gains funds during good times

Question 11

Public opinion on taxes

Answer 11

holds true for all levels of gov’t
Taxes are “too high”
* Don’t want to pay more!
But services are “too low” or “just right”
* Don’t want “cuts”
….Simply does not add up!