Revenue Sources for Texas State Government - Research Paper Example

Analysis of Texas Budget In the fiscal years between 2009 and the total expenditure for Texas increased by $4.629 billion. In 2009, the budget stood at $92.296 billion; while, in 2013, the budget was valued at $96.992 billion (Griender). The resurgent Texas economy and the subsequent revenue growth gave lawmakers the freedom to prepare a very conservative budget. They had some definite funding priorities, for example; the lawmakers restored previous spending cuts on education. The increase in expenditure represents a 5.02% increase. This was, however, below the cumulative inflation period during the same period, which stood at 9.06 percent, calculated by using consumer price indices for January 2013 and January 2009 (Griender). Revenue sources for Texas state government Sales and use taxes. The Texas government applies sales and use taxes at the final points of sale. Consumers are taxed for the goods and services they purchased outside Texas and used within the state of Texas. The sales and use tax is the highest tax revenue for the Texas government. In the fiscal year 2014, the Texas government collected approximately $19 billion in state sales taxes. Texas charges an average tax of 6.25% for all foods (Griender). The government set the rate in the year 1990, and there have not been any changes in the rates since then. Cities, transit systems, districts in the state and counties may impose the local taxes, which may be up by another 2 %. Majority of Texas residents pay total sales taxes of 8.5%. There are, however, many goods that are exempted from this tax. These commodities include motor vehicles, crude oil, mixed drinks, insurance premiums, and aviation fuel. This is because these items are taxed under other provisions. The Texas state aims at increasing sales tax revenue and removing the exemptions. The government also puts various measures to improve collections. Some of these measures include examination of funds from sales tax, tightening the eligibility for exemptions as well as scrutinizing applications for tax refunds on items meant to be tax-free. Registration and other fees Texas state government collects various fees that are charged to people operating motor vehicles within the state. The largest source of these records revenues is the car registration fees and permits, which are meant for special vehicles such as vehicles with excess weight and size. Motor vehicle fees generate about $2.4 billion in a fiscal year (Griender). The 82nd legislature has powers to consider proposals that aim at increasing the motor vehicle registration fees. According to estimates from the Texas Transportation Institute, the state government can raise its revenue from motor vehicle registration by $623million if it increases the annual fees by about $25 (Griender). Excise taxes on tobacco and alcohol Excise taxes on alcoholic beverages and tobacco taxes are among the most common and oldest taxes in Texas. Texas levies two separate tobacco taxes. One tax is on cigarettes and the other on cigars and other forms of tobacco products, which include snuff, chewing tobacco, and smoking. The government levies taxes on cigars per package. On cigars and other tobacco products, the tax charge is based on the weight of the product. The state also collects other separate taxes on liquor sales per packages, such as malt, beer, wine, and mixed drinks. Most of the revenue collected from tobacco and alcohol tax goes into the general revenue fund. Some of the tobacco taxes go to serve special purposes such as paying for property tax relief. The tax levied on alcoholic beverages generates about $1.6 billion in a fiscal year. Tobacco taxes raise about $1.1 billion for the Texas government in the exercise (Griender). Texas also collects revenue from tobacco related tax. A ruling from a lawsuit that was filed by the Texas government in 1998 defines the payments. The ruling, also, requires that, big companies dealing with tobacco production and manufacture pay up to $17.3 billion, spread within a period of 25 years (Griender). The companies will also keep on paying more money to Texas depending on the tobacco sales in the future. Texas tobacco receipts will be about $867 million in the fiscal 2014 year. Oil and gas taxes There are three types of petroleum and gases text. These taxes are 4.6% tax on oil production, a 7.5 tax charged on production of natural gas and taxes on barrels of oil produced. Taxes on oil production and regulation generate about $2 billion for Texas (Griender). Natural tax generates about $1.3 billion in a fiscal year. Texas is endowed with abundant oil and natural-gas deposits. The state, therefore, gets substantial amounts of money from the petroleum industry. Property taxes Property in Texas is only subject to local taxation. The state performs a strategic oversight role by limiting the rates charged. Since the Year 1979, Texas has levied taxes on business, and personal property based on their appraised values. The costs do not usually exceed the fair market price for the particular properties. Local property revenues through agreements entered into with school districts, which ensure individual income levels. Under the formulae used by the state in the school finance, the state makes up for lost revenue whenever property taxes fall below the minimum threshold. Selling or leasing state assets Texas leases or sells public goods in order to augment revenues. The government also raises short-term revenue from leasebacks of public properties. The Texas facilities commission plans to expand and invest in state assets. Texas has state-owned buildings and parks, which bring in considerable amounts of funds to finance its budget. Traffic fines Texas charges traffic fines of $30 to $45 for each person found guilty of committing a traffic offense. The LLB estimates that these fines generate about $85 million in general revenue (Griender). This provides finances required boost the budget while influencing drivers to behave more positively. Part of the revenue collected from traffic fines also goes to the state fund for trauma cancers and part of it goes to the General Revenue Fund. Major expenditures Public education The Texas government finances public school education through a complex set of mathematical formulae, contained in the state law. The state distributes aid to local school districts in order to mitigate disparities in the property tax bases. The government allocates more money to school districts that have little property value per student than the others with a higher level of property wealth per student receive fewer funds. Lawmakers restored previous cuts of $4 billion back into public education (LeRoy et al., 16). The government also increased the amount of funding for textbooks used in public schools in the standard curriculum. There was also an allocation of more funds used for protecting the fiscal health and school teacher retirement system. Another expenditure item for Texas state government is higher-education. In the 2014 budget, there was a $550 million increased higher-education funding. The government also offers student grants to assist students’ undertake their higher education comfortably. In the 2014 budget, there were over 135 million increased allocations for students (LeRoy et al., 28). This forms a significant part of government spending due to the ever-increasing number of students. The allocations for each student increases gradually with every passing budget. Health and human services Health and human services constitute another major item of government expenditure. More than 85% of Texas human services and state’s health spending is for Medicaid. The government provides insurance program that covers low-income Texans. As a necessary program for meeting certain minimum federal standards, the state government incorporates $400 million of its savings for new cost containment initiatives. Funding directed to human services increased by $2.1 billion in the 2014 budget from $4.2 based on some conservative assumptions about case hold growth (LeRoy et al., 45). The budget also provided additional funding for Child-Protective Services. There was also more funding aimed at supporting foster care. The state government regularly provides funds designed to fighting the drug menace. The fund used for investigations and remunerated individuals engaged in the fight. The fund also supports construction and running of rehabilitation centers. There are also funds availed for providing mental health services. Many Texans with mental problems or with relatives having mental problems depend heavily on the services that the Texas government provides. The high dependence on the state in the provision of this service makes it a substantial expenditure item for the state. Another expense item is in public safety and corrections. Recently, there has been a little growth in the state’s prison population. Nevertheless, the state government increased state employee salaries by 1% (LeRoy et al., 31). This, therefore, means that more money would be set aside for the operation prisons due to high expenditure on remuneration. Texas runs quite populated prisons. The substance abuse in Texas does not help this situation at all. Its proximity to Mexico makes Texas a transit hub for narcotics and, therefore, Texans are likely to engage in substance abuse. Prisons are expensive to run and, therefore, demand that the government injects a lot of money into the jail systems. There are, however, a few conservatives who criticized the ever expansionary nature of the Texas budget. They argued that the state spending expanded too quickly in reference to growth in earnings during these periods. There were increases in the Rainy-Day Fund, which totaled to about $4 billion in the 2014 but. This was primarily to fund infrastructure projects initiated in the previous fiscal year’s budget. Water and transportation infrastructure The Texas government allocated $5.0 billion toward developing water and transport infrastructure. These are very critical components of the success of any state (LeRoy et al., 31). Texas has had periods of significant broad-based growth. This type of growth brings in an increased demand for water and heightens the strain on the highway system of the state. The government allocated $3.7 billion from the ESF to develop water and transportation infrastructure (LeRoy et al., 54). This was to take a precaution for the anticipated effects of sustained broad-based growth. Current fiscal state of the Texas government When the 83rd legislature convened in 2013, the Texas economy had roared back. The state coffers filled with massive surpluses. With all the books closed after the 2014-15 budget, the government had spent $190.8 billion from state funds and $93.6 billion from other discretionary revenue sources (LeRoy et al., 20). Texas is now on a solid foundation for future growth. Texas closed the books after the 2013 fiscal year with a large budget surplus of 5.5 billion. After Texas, lawmakers forwarded the 2014-15 budget to the governor, several groups wrote letters to the government complaining about the 26% budget increase (LeRoy et al., 21). According to them, the 2114-15 budget was irresponsibly high. Additional tax cuts would have been ideal for the Texas economy. The 2014-15 budget grew faster than the level of population. The government used $7 billion to cover for bills that the prior legislature deferred. The government did so to bring the previous state budget into balance. Works Cited Griender, Erica. "Texas Has An Unexpected 8.8 Billion Surplus." Texas Monthly. Texas Monthly, 8 Jan. 2013. Web. 7 Dec. 2014. . LeRoy, Greg, Mattera Philip, Cafcas Thomas, and Mcllvaine Leigh. "Who Is Funding Texas Gov. Rick Perry’s Partisan Job-Piracy Trips?." Good Jobs First. (2013). Web. 7 Dec. 2014. Read More