U.S. Government and Civics / Unit 11: State and Local Government and Public Policy
11.4 Paying for State and Local Government
Notes
States and localities raise money from several sources to pay for services.
- Sales tax: a percentage added to purchases; a major source of state revenue in most states.
- State income tax: most states tax income, but some do not.
- Property tax: based on the value of land and buildings; the main local tax and a major source of public school funding.
- Other sources: fees, licenses, lotteries in many states and federal grants.
- Most states must pass a balanced budget each year or budget period, unlike the federal government.
- Biggest spending areas: education, health care (including Medicaid), public safety and transportation.
- Example: if a home is assessed at $200,000 and the property tax rate is 1.5%, the yearly tax is $3,000.
Practice
Which tax is the main source of revenue for most local governments and schools?
Local governments rely heavily on taxes on land and buildings.
A home is assessed at $150,000, and the property tax rate is 2%. What is the yearly property tax?
2% of 150,000 is 3,000.
Most state governments, unlike the federal government, must:
Most state constitutions or laws require balanced budgets.
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