Taxation & Budgeting

Local governments of Texas rely on __ as their primary source of income?

Property tax (applies only to real estate).

General taxes

Fund routine government operations (e.g., salaries, services).

Special taxes

Fund specific projects (e.g., roads, bridges).

Tax Texans do NOT pay

State income tax.

Progressive tax

Higher rates for higher incomes (e.g., federal income tax).

Regressive tax

Higher burden on low-income earners (e.g., sales tax).

State’s main revenue source

Sales tax (~60% of tax income).

Local governments’ main revenue source

Property tax (ad valorem tax on real estate).

General sales tax

Tax on goods/services (~60% of state tax revenue).

Gasoline tax

20 cents per gallon tax on fuel.

Severance tax

Tax on natural resource extraction (e.g., oil, gas).

Franchise tax

Primary tax on businesses (based on revenue/margin).

Sin tax

Tax on “undesirable” goods (e.g., alcohol, cigarettes).

Ad valorem tax

Tax based on property value (“stealth tax” due to annual increases).

Legislative Budget Board (LBB)

Proposes biennial budget (co-chaired by Lt. Gov. and Speaker).

Texas fiscal year

September 1 to August 31.

“Pay-as-you-go” budgeting

Balanced budget required; limited borrowing for emergencies.##