Learning Objectives

After reading this chapter, you should be able to understand:

  • the primary sources of revenue for states and localities
  • the different types of taxes utilized by states and localities
  • why tax capacity and tax effort vary among the states
  • who controls the budget process
  • how the state budget process differs from the federal budget process
  • what the largest areas of expenditures are for state governments
  • the difference between discretionary spending and entitlement spending