Ch. 25
Section 2
State and Local Governments
State Government Revenues
► The
largest source of revenue for state
governments is intergovernmental revenue –
the money that one level of government receives
from another level. $.28 of every dollar
► Federal
government gives states money for
welfare, highways, hospitals, etc.
State Government Revenues (cont.)
►
Sales tax is the second largest source of state revenue;
$.21 of every dollar
►
Tax on consumer purchases
►
A percentage of the purchase price is added to arrive at
the final price the consumer pays.
►
The merchant turns over the taxes to a state government
agency
State Government Revenues (cont.)
►5
states do not have a sales tax; Alaska,
Delaware, Montana, New Hampshire, and Oregon.
► Other
states however range from 2.9 – 7%
► Internet
purchases are not subject to sales tax
which cut into state revenue.
State Government Revenues (cont.)
► 3rd
largest source of state revenue comes from
contributions that states and state government
workers make to their own retirement plans
► It
is invested money until needed to pay for
people’s retirement.
► $.17
of every dollar
State Government Revenues (cont.)
► State
gets revenue from income tax as well.
► Some
states charge a single rate to all taxpayers
► Some
states tax a percentage of the federal
income tax
► Seven
states do not charge a income tax
Local Government Revenue
► Local
governments # 1 source of revenue comes
from intergovernmental revenue
► 36%
of revenue comes from the federal
government and state government
Local Government Revenue (cont.)
►
Property tax is the 2nd largest source of local revenue
►
These are taxes that people pay on the real property or
the personal property they own.
►
►
Real property includes land and buildings
Personal property includes portable objects (jewels, cars,
art)
►
Local governments anymore only tax real property
Local Government Revenue (cont.)
► Water
and Utility companies are the 3rd largest
source of revenue; $.07 of every dollar
► In
some places people are hit with a federal, state,
and local income tax
State Expenditures
►
Largest expenditure for the states are entitlement
programs – these programs provide health, nutritional, or
income payments to people who meet eligibility
requirements
►
Higher Education (colleges) is second on the list
►
States subsidize or pay part of the costs for people’s
college education.
►
Without this, people would pay higher tuition and other
fees.
Local Expenditures (cont.)
► 1/3
of all spending goes to local school districts
and the operation of public schools.
► Elementary
and Secondary education
► Building new schools; new additions; renovations
► Hiring new teachers
► Raises for veteran teachers
Local Expenditures (cont.)
► Police
► Local
firms
and fire protection
community water service/contracting private
► Sewage/garbage
disposal