Follow the Money - From Surpluses to School Buses: Understanding Public Finance

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Annual BRASS program
June 26, 2006
New Orleans, Louisiana

Public Finance Information Sources:
A Bibliography

Compiled by BRASS 2006 Annual Program Planning Committee

Appendix A: Public Finance Vocabulary
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APPENDIX A: PUBLIC FINANCE VOCABULARY

Public finance includes many specialized terms especially for local and regional governments. This free online glossary of 150+ terms provides definitions for many basics to help with searching for and interpreting the information.

This document, and its parent guide, "Public Finance Information Sources: A Bibliography", supplements the content delivered during "Follow the Money – From Surpluses to School Buses: Understanding Public Finance," the program organized and presented by the Business Reference and Services Section (BRASS) and offered at the 2006 Annual Meeting of the American Library Association in New Orleans.

Special thanks go to Jennifer Boettcher (Georgetown University) and Darcy Del Bosque (University of Texas at San Antonio) who compiled this appendix. The terminology and its definitions were based on Chambers 21st Century Dictionary, Public Administration Glossary of Terms from Maxwell School of Syracuse, A Dictionary of Economics, Wall Street Words, The Oxford American Dictionary of Current English.

Accountability - A political principle according to which agencies or organizations, such as those in government, are subject to some form of external control, causing them to give a general accounting of and for their actions; an essential concept in democratic public administration.

Add-ons - Anything added to supplement something else or an extra charge added to the basic charge of something

Anti-tax environment - Political times when the taxpayers don’t want to pay anymore taxes.

Appropriation - Money set aside for a specific purpose. An appropriation bill authorizes the government to spend money

Assessment - Process of appraising property for tax purposes

Base-broadening activity - Activities which increase the tax base to eliminate or reduce tax expenditures.

Bellwethers - A financial instrument (such as a stock or bond) that shows the direction of the market

Block grants - Funds allocated to the states by the federal government. States can use their own discretion to spend the money.

Boom and bust cycle - Event or population that repeatedly and regularly increases and decreases in size.

Buoyancy - A measure of how rapidly the actual revenue from a tax rises (including that due to any change in the tax law) as the tax base rises. It differs from tax elasticity in not holding the tax law constant.

Budget insolvency - inability to meet financial obligations when they are due.

Budget reserve - Funds that are earmarked for special purposes to protect the city against shortfalls in revenue and unforeseen expenditures.

Budget stabilization fund - a fund set aside with surplus money to be used when there is a shortfall

Business tax - a compulsory charge levied by a local, state or federal government against the income, wealth, or consumption of a corporation.

Business license - a legal authorization issued by municipal or state governments and required for the operation of business

Capital gains - profit on the sale of an item

Capital intensity - amount of fixed or real capital present in relation to other factors of production, especially labor

Classified property tax - a tax rate that depends on the usage of the property being taxed

Collateral heirs - a person who inherits from someone who is not part of their direct line

Collection - procedures followed to collect payments that are past-due

Colonial tax - The colonial tax system was designed to provide the colonial administrator with unfettered powers over the colonial subjects. It reflected the colonial state in which the subjects had no rights in determining the form of its financing.

Combined reporting - "combined reporting" is when an entire corporate family, including all of its subsidiaries, files a single tax return instead of the separate filing system used today. Only then is the income allocation formula applied to determine state and local corporate income taxes.

Community development - An approach to the administration of social and economic development programs in which government officials are dispatched to the field to act as catalysts at the local level, encouraging local residents to form groups, define their own needs, and develop self-help projects. The government provides technical and material assistance and helps the community establish institutions, such as farm cooperatives, to carry on the development programs after the officials have left.

Consumption patterns - how much a product or resource is consumed.

Consumption tax - a tax on the purchase or use of a product or service

Corporate tax - a levy placed on the profit of a firm

Cost of government services - how much money is used in running a government

Credit rating agency - A firm which collects information affecting the credit-worthiness of municipalities or companies, and sells the resulting credit rating for a fee to interested parties.

Cross subsidy - using profits from a product or service that is generating a profit to subsidize a product or service that is not profitable

Customs duties - A tax on imports, or tariff

Cyclical deficits - As taxes are an increasing and government spending is a decreasing function of national income, during a slump in activity the cyclically adjusted budget deficit will be smaller than the actual, and an actual deficit may correspond to a cyclically adjusted budget surplus.

Deductibility - deductible expenses

Devolution - process of law by which a right, liability, title, estate, or office is passed from one person to another

Double-weighted sales - unlike the single-weighted formula, the double-weighted formula taxes payroll and property at a lower rate and, thus, might encourage businesses to employ workers and locate property in an area.

Draw down reserves - taking money out of the rainy-day fund

Elastic revenue - Elasticity is an economic measure of consumer response to price changes. A product or service has an elastic demand if the demand for the product will decrease very quickly as the price increases. Concert tickets typically have an elastic demand - as prices increase, fewer consumers buy tickets. A product or service has an inelastic demand if the demand for the product is not sensitive to price change. Alcohol and tobacco typically have inelastic demands; consumers will be less sensitive to price changes on these products and are more likely to continue buying them. When considering implementing taxes or fees on products that will be sold, state and local governments need to consider the elasticity of demand, in order to determine whether the tax or fee will reduce sales, and thereby reduce revenues.

Environment fees - designed to bring environmental concerns in line with fiscal reasonability.

Excise tax - a tax paid when purchases are made of a good. Often this tax is figured into the price of the product, such as gasoline.

Exemptions - to free someone from a duty or obligation that applies to others

Expenditure commitments - Expenditure on fixed assets to which a company is committed for the future. The aggregate amounts of contracts for capital expenditure not provided for in the accounts for the year and the aggregate amount of capital expenditure authorized by the directors but not yet accounted for should be disclosed in the notes to the accounts

Expenses - cost incurred; payment of money.

Faculty tax - fix rate on income by profession in colonial time

FMAP - Federal Medicaid Assistance Percentage

Fees - A fee is generally a charge for services rendered. Although laws vary widely, many states require that fees be set at rates that will cover only the costs of the services provided.

Fine - a sum of money exacted as a penalty by a court of law or other authority: a parking fine.

Fiscal crisis - Actual or supposed inability of the state to raise enough tax revenue to pay for its services

Fiscal federalism - the system of payment transfers or grants that the federal government uses to share its revenues with the lower levels of government

Foreclosure - Taking over by a lender of a mortgaged property, because of failure by the borrower to comply with the conditions of the mortgage. This failure usually consists of failure to make interest and amortization payments by the due dates.

Flat-rate income tax - Also called a proportional tax A tax with a single rate (as opposed to one in which the rate of tax increases with the size of the tax base) and with no relief or exemptions apart from a standard personal allowance.

Floating debt - short term debt that has not been permanently funded

Franchise tax - A tax on the right of a firm to do business within a certain geographic region.

Fund transfers - Moving value from one account into another.

Gambling revenues - monies received through gambling fees

Graduated income tax - An income tax having a minimal number of progressively higher rates. For example, a taxing authority may levy a tax of 10% on all income up to $15,000, 15% on income from $15,000 to $25,000, and 20% on all income above $25,000. The graduated flat tax is a compromise between a flat tax and a progressive tax.

Gross receipts/earnings tax - Could be a sales tax, use tax, or rental tax is paid to a county or municipality in good faith.

K-12 education - references to kindergarten thru grade twelve

Income maintenance programs - welfare

Income tax - Income tax is normally zero on some bands of small incomes, both on equity grounds and because of the expense of collecting tiny amounts of tax. It is then normally proportional up to some upper limit; income beyond this is taxed at higher rates. Thus income tax is usually progressive

Impact fees - A fee assessed against private developers in compensation for the new capacity requirements their projects impose upon public facilities.

Inheritance tax - A tax on amounts inherited by particular heirs. The tax rate can vary according to the relation with the deceased, for example spouses may be exempt; or progressively with the amount received.

Intangibles assets - income, interest on loans, stock returns, dividends, insurance premiums

Intergovernmental revenue - Amounts received from other governments as fiscal aid in the form of shared revenues and grants-in-aid, as reimbursements for the paying government or in lieu of taxes.

Internal improvements -Improvements to county/city property, such as water-wells and courthouses

Inventory tax - the property tax applied to the assessed value of business inventories, at the same tax rate as applied to land, buildings and equipment.

Itemized deductions - An expenditure that may legally be used to reduce an individual's income-tax liability. Potential deductions of particular interest to investors are expenditures for subscriptions to financial publications, a lock box for storing securities, and computer software for investment-related activities.

Levies - imposition or collection of a tax

License taxation - general term used for a business license/fee

Liquor tax - national, state, or local tax on liquor

Location neutrality - This means that the tax system should not give incentive to exporters and importers to change their trade and location decisions for tax avoidance reasons.

Lottery sales - How much money is made before payout, operations, and allocations to government funds.

Medicaid - A US government scheme to pay for medical treatment for the poor.

Multi-jurisdiction - across many agencies or governments

New debt issuance - Bond, bills, and notes

Non-tax revenues - include return on investments and other non-tax revenues, such as net proceeds from the sale of assets, user charges, etc.

One-shot revenue - short term fixes and not long term solutions

Overtaxed mindset - feeling like you are require to pay too much tax

Poll tax - a tax levied on people not things, frequently a tax for voting

Principal payments - Of or relating to a derivative mortgage security scheduled to receive all the principal but none of the interest payments in a pool of mortgages.

Production activity - doing work, as apposed to consuming

Property tax - A tax based on the value of property owned by the taxpayer.

Public goods - Goods or services which, if they are provided at all, are open to use by all members of society. Examples include defense, law and order, and public parks and monuments. As nobody can be excluded from using them, public goods cannot be provided for private profit.

Public land - public domain land or property or information which belongs to and is available to the public.

Public safety - For the welfare of the public, could be policy or water works

Rainy day funds - saved money to be used at a time of special need in the future.

Real property - (realty) Any property consisting of land or buildings.

Refinancing government debt - reissue new debt to pay off old debt

Regressive tax - a duty levied at a decreasing rate as the tax base increases in size

Representative-firm approach - the tax analyst attempts to view a state’s business taxes and those of its economic competitors through the eyes of rational, well-informed, profit-maximizing firms in the process of choosing a site for a new facility.

Research and development credit - Reduces the taxpayer's income or franchise tax. To qualify for the R&D Credit, the taxpayer must have paid or incurred qualified research expenses while conducting research in California for a qualified activity.

Retail sales tax - A sales/excise tax is imposed on gross receipts from retail sales.

Revenue requirement - The total revenue that the utility is authorized an opportunity to recover, which includes operating expenses and a reasonable return on rate base.

Revenue structure - How the budget uses revenue sources

Revolving loan funds - examples of "gap" financing programs

Rolling federal deficits - debt forwarded into the future

Royalties - taxes levied on minerals that are extracted in accordance with a mining license

Safety net - A system of available payments in cash or in kind which will keep people's incomes from falling below some socially accepted minimum level. This needs to cover old age, sickness and disability, and unemployment.

Sales tax - a tax levied on merchandise and collected by a retailer

Severance tax - a tax imposed by the state on the extraction of natural resources that will be used in other states

Shortfall - amount that a supply falls short

Sin tax - tax on items that are not regarded as necessities or luxuries, such as cigarettes

Single business tax (SBT) - an origin-based business value added tax

Single factor apportionment formulas - sales tax

Social engineering - The application of sociological principles to specific social problems.

Social services - services provided by local or national government for the general welfare of people in society, eg housing, education and health.

Spending cuts - reduction in existing program’s expenses

Squeaky wheel - a person who complains greatly

State coffers - state financial resources or funds

Statutory charges - Legally mandated services provided by the government

Structural deficits - non-cyclical deficits

Substantive nexus - power to tax

Tangible property - tangible assets or property Assets which are visible (such as machinery, buildings, furniture, jewelry, etc.).

Tax amnesty - A period allowed by tax authorities during which taxpayers who are outside the tax net, but should be registered for tax purposes, can register for tax without incurring penalties for the period in which they were illegitimately outside the net.

Tax apportionment - Process by which funds are allocated to agencies for specific portion of the year.

Tax base - The object to which a tax is applied, for example income

Tax credits - and expenditure deducted from a tax payers bill

Tax evasion - using illegal means to reduce a tax payment

Tax exporting - shifting part of the state tax burden to nonresidents

Tax formulas - Used to calculate property taxes, it is generally the case that in a given state, the higher the value of the property, the greater the tax revenue.

Tax reforms - governments changing their tax laws and regulations.

Tax swaps - selling a security and reinvesting the proceeds in another security to gain a tax advantage

Taxpayer - someone who pays or is liable for tax or taxes.

Three-factor formula - business tax based on property, payroll, and sales

Throwback rule - a rule that states that the distributions by a trust of previously accumulated income are taxed in theoretically the same way as the distributions would have been taxed when the income was earned by the trust

Tolls - a charge payable for permission to pass a barrier or use a bridge or road, etc.

Unemployment insurance - a federal government program providing payments to eligible unemployed people, funded by tax revenues and contributions by employers and workers.

Unfunded federal mandates - Federal laws, but no funds to enforce

Uniform tax rate - tax levied on business property which is the same percentage for the whole country.

Value-added tax - An indirect tax levied on goods or services as a percentage of their value added. The customer pays VAT on purchases in addition to the normal price; the seller then pays the government VAT collected on sales less the VAT they have paid on purchased inputs.

Windfall - an unanticipated profit or gain

Withholding payments - The holding back of a portion of wages, dividends, interest, pension payments, or various other sources of income for payment of taxes to the U.S. Treasury.

Workers compensation - The liability of employers to compensate their employees for accidents and illnesses due to their work.

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bulletFollow the Money - From Surpluses to School Buses: Understanding Public Finance
BRASS Program, ALA Annual Conference, June 26, 2006



Disclaimer: This publication has been placed on the web for the convenience of BRASS members. Information and links will not be updated. Posted 23 June 2006.