Preview
Objectives
After studying this section you will be able to:
Section Focus
Like the federal government, state and local governments use the revenue from taxes to pay for a variety of programs and services. In general, states spend the largest amounts on grants to local governments, education, and public welfare.
Key Terms
You and your family are thinking about colleges. Which one offers the courses you want? How much does it cost? During your research, you find that colleges within your state's university system are far less expensive than private schools. The reason is that your state government is paying part of the cost of running the state colleges. In fact, higher education is one of the largest areas of state government spending.
What else do states spend money on? In this section you will look at patterns of taxing and spending by state and local governments.
Like families and individuals, governments must plan their spending ahead of time. The federal government has just one budget for all kinds of spending. States have two budgets: operating budgets and capital budgets.
A state's operating budget pays for day-today expenses. Those include salaries of state employees, supplies such as computers or paper, and maintenance of state facilities, from the state capitol to recreation areas and roadside parks.
A state's capital budget pays for major capital, or investment, spending. If the state builds a new bridge or building, the money comes from this budget. Most of these expenses are met by long-term borrowing or the sale of bonds.
State colleges and universities, such as the University of Texas at Austin, receive state funding.