State & Local Gov. Exam 2

List the types and frequency of different levels of governments in the U.S.

1 Federal, 50 State, and 90,000 Local Governments

Explain the different advantages of having multiple levels of government. (5)

Efficiency, local govs tailored to local needs. Equity, those who pay are the ones who benefit. Participation, local decisions influenced by locals. Protection against tyranny, difficult to usurp dispersed power. Choice, can move away from gov you don’t like.

Name the five periods of American government.

No-gov., Municipal gov., State-Intercity, Federal gov., New Federalism

Describe the No-Government Period, and when and why it began and ended.

Started with independence and ended with the industrial revolution. Era of rural communities with little government interference. “Least gov. is best gov.”

Describe the Municipal Government Period, and when and why it began and ended.

Started with the industrial revolution, immigration, and urbanization. Ended when state governments started regulating political machines. Municipal gov. grew to provide city services. Era of political corruption.

Describe the State-Intercity Government Period, and when and why it began and ended.

Started when state governments started regulating political machines using Dillon’s rule. Ended with the Great Depression. Made city elections non-partisan, municipal hires under civil service hired by merit, and independent school districts.

Describe the Federal Government Period, and when and why it began and ended.

Began with the Great Depression, WWII, and the Cold War forcing the Federal gov. to protect the nation. Start of Federal taxes and deficit spending to loan to states, provide social security, and ensure national standards of education, criminal rights, and marketplace regulation.

What is Dillon’s rule?

Local governments can only exercise powers granted to them by state governments

What are the 3 changes implemented by the Municipal Gov. Period to curb political machines?

non-partisan city elections, municipal hires under civil service and hired by merit, and separated school districts from the government

What did the National Government ensure in its new “protector and guardian” role in the Federal Government Period.

Social security, American labor recovery, education, civil rights, clean environment, and national defense

Which 3 main areas of state responsibility did the Federal Government start moving into in the Federal Government Period?

Criminal, social, and regulation of marketplace

New Federalism started with the Reagan administration with the goal of shifting more powers to the states. How successful was this and why?

Partly successful, some powers were shifted to the states, but with new responsibilities came new bills that states didn’t want to pay

List four reasons why some advocate for states to take less Federal grants?

The money comes from somewhere, they promote wasteful spending, reduce state policy diversity, and breed bureaucracy

Define “deadwood” and give an example from the Texas constitution.

Unenforceable provisions that conflict with the US bill of rights. The provision that Texas requires politicians to believe in a supreme deity is unenforceable under freedom of religion.

How are government budgets highly accurate policy statements?

How revenue is generated and who it is spent on depends on government priorities, and money doesn’t lie

Define merit goods.

Goods a government decides shouldn’t be denied to people who can’t pay, like public education

Explain what GDP is and what is does and doesn’t measure.

The domestic goods produced by a country annually. It measures the size, health, and power of a nation’s economy. It does not measure individual economic wellbeing.

How have the 3 largest sources of Federal tax revenue shifted between 1950-2010?

Payroll taxes and individual income taxes have increased, while corporate income tax has decreased

What are the sources of revenue a state government can use? (6)

Taxes, fees and licenses, investments, direct sales, borrowing, and gambling

In the biennium budget statement, how is the income split when deciding where to spend money?

dedicated revenue and general revenue

Starting with the General Revenue, how is the final estimate for the money available to be spent by legislature determined?

An amount is set aside for the ESF rainy day fund and the overrun balance from the last biennium is added

Define tax shifting. Give two examples.

Earning tax revenue from people or entities outside of the state or locality. Severance tax and hotel occupancy tax.

Explain how taxes are based on an ability-to-pay model and what that means about contribution and benefit distributions.

Those who have more pay more and the share of benefits received is not tied to the share of costs paid

Who makes the decisions behind the redistribution of wealth from taxes?

Tax policy decisions are made by the residents and representatives within each state and locality

Compare and contrast taxes and user fees and explain hybrid services.

Taxes are based on an ability to pay model and the services benefit everyone. User fees provide benefits only to the purchaser. Hybrid services are paid for by both, such as toll roads.

Define zero-sum game as it relates to taxes.

For services to exist, someone is paying the bill

What calculation is used to find the Tax Bill?

tax bill = tax base x tax rate

What calculation is used to find the Tax Burden?

tax burden = tax bill/total value

Explain the difference between tax burden and tax incidence.

Tax burdens are a single percentage value. Incidence is the characterization of tax burdens across a range of incomes

Explain how a taxation system with progressive tax rates and still create a regressive tax incidence.

If the rate doesn’t increase as proportionately fast as the total value, the tax burden could still be lower for higher income earners

Characterize the rate, incidence, and revenue predictability of income tax.

progressive, progressive, moderate

Characterize the rate, incidence, and revenue predictability of sales tax.

Fixed, regressive, low

Characterize the rate, incidence, and revenue predictability of property tax.

Fixed, regressive, high

Explain Texas relative dependence on property tax at state and local levels.

There is no state level property tax, but local governments have a very high dependence on property taxes

What are the 2 largest state and local government expenditures?

Education and social services

Discuss the various ways that Texas laws enforce fiscal (budgetary) discipline on government spending.

Texas has a “pay as you go” system and in areas where going into debt is allowed, it is capped. Additionally, some areas have spending limits, even if additional revenue is available.

What are capital goods?

Goods used for public services with a long lifespan

Explain when state and local governments can and do go into debt and why this is associated with issues of equity.

For capital goods, so that those who are paying can also benefit

Explain why state official’s harsh criticism of high levels of local government debt may be unmerited and even necessary given the division of labor between state and local governments and restrictions placed on local government revenue streams by the states.

The local government is responsible for aging infrastructure repairs and accommodations for a growing population. Local governments are capped at a 2 cent sales tax and property taxes are hard to raise, borrowing is the only option