Glossary of Budget and Tax Terms

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Ability to Pay Principle - A fair tax system asks citizens to contribute to the cost of government services based on their ability to pay. This principal suggests that persons with higher incomes, or greater ability to pay, should pay more in taxes than those with lower incomes.
Ad Valorem Tax - A tax based on the value of the thing being taxed. Sales and Use Taxes are examples of Ad Valorem Taxes.
Adequacy - A tax system is considered adequate if it collects enough revenue to pay for the services required by residents and policymakers. One threat to the adequacy of a tax system is a structural deficit.
Adjusted Gross Income - This refers to the amount of income that is subject to tax after all adjustments have been taken, but before deductions/exemptions have been subtracted on a person’s individual income tax form.
Adjustments - Income tax breaks that reduce the amount of taxable income.
Agency - Any department, officer, authority, public corporation, quasi-public corporation, commission, board, institution, state, university, and any other public agency created by the State, other than units of local government and school districts. (Source: MS Department of Finance and Administration)
Agency Budget Requests - Agency Budget Requests are prepared by each state agency for consideration by the Joint Legislative Budget Committee. Agency requests contain the mission of the agency, a description of the duties and responsibilities of the agency and a five-year strategic plan for the agency that includes performance objectives and achievements. The request also contains the agency’s financial data for the prior and current years as well as their request for the upcoming fiscal year. Depending on its complexity, an agency’s budget request can range in size from around 15 pages to several hundred pages.
Appropriation - A law that allows the state to spend money. State appropriations pay for various state services including: education, highways and public health. Each year the state enacts around 120 appropriations bills.
Attorney General - The Attorney General is the chief legal officer and advisor for the State of Mississippi on both civil and criminal matters. His responsibility is to represent public officials and governmental agencies and to issue legal opinions that interpret state law. The Attorney General has the sole power under Mississippi law to bring or defend a lawsuit on behalf of the state. He acts as counsel to state agencies to defend them or bring suit on their behalf. Most importantly, the Office is charged with the representation of the people of the State of Mississippi.
Automated Budget Request System - The Automated Budget Request System (ABRS) was created to simplify the process of preparing an agency’s annual budget request. ABRS is available to all state agencies and institutions and can be accessed online. Budget request submissions are made via e-mail.
Budget (state) - A plan of proposed expenditures and the means of financing them with respect to a specific period of time. The plan may be for a particular organizational unit or for some combination-- such as all state agencies. (Source: MS Department of Finance and Administration)
Budget Contingency Fund - This fund was formed to receive transfers from other fund sources (Special and General). FY 2002 marked the first use of the Budget Contingency Fund to supplement the State General Fund. Any funds spent from the Budget Contingency Fund are considered non-recurring.
Budget Hearings - Agencies must make decisions about their budget needs and priorities and submit their budget requests for approval by the Legislative Budget Office and the Governor by August 1st. In September, the Joint Legislative Budget Committee conducts hearings to discuss all of the agency budget requests. Budget hearings give committee members a chance to ask specific questions of agency directors. Hearings are open to the public and usually take place 2 to 3 weeks after Labor Day.
Budget Year - The twelve months of the Fiscal Year plus the lapse period.
Built-in Costs - New costs arising from new or expanded programs which are deemed as mandatory due to state or federal law, court order or previous legislative commitment are called built-in costs. The calculation of built-in costs is often difficult—while a new program may be mandated, the level at which it is to be funded is not mandated.
Corporate Income Tax - The corporate income tax is a tax on business profits. As with the personal income tax, corporate income tax rates are 3%, 4% and 5% depending on income.
Corporate Tax Credits - Tax credits lower the tax owed by the corporation by the amount of the tax credit. In Mississippi, tax credits are provided to corporations for a wide variety of actions, including creating new jobs, providing child/dependent care for employees and producing motion pictures in the state.
Department of Agriculture and Commerce - The mission of the Mississippi Department of Agriculture and Commerce is to regulate and promote agricultural-related businesses within the state and to promote Mississippi's products throughout both the state and the rest of the world for the benefit of all Mississippi citizens. (Source: www.Ms.gov)
Department of Revenue - The Mississippi Department of Revenue (DOR) is the state agency responsible for the administration of the state’s revenue laws and other areas of the law as determined by the Mississippi Legislature.
Division of Aging and Adult Service - The Division of Aging and Adult Services plans, coordinates and advocates for, and ensures the provision of services to all older Mississippians. (Source: www.Ms.gov)
Earned Income Tax Credit - The Earned Income Tax Credit (EITC) is a federal tax credit for low- and moderate-income working people. It is designed to encourage and reward work as well as offset federal payroll and income taxes. The EITC is "refundable," which means that if it exceeds a low-wage worker's income tax liability, the IRS will refund the balance. Twenty-five states, including the District of Columbia, have established their own EITCs to supplement the federal credit.
Education Enhancement Fund - This fund provides supplemental support of K-12, Two-Year Colleges and Four-Year Institutions of Higher Learning. State statute requires that a percentage of state sales tax collections be deposited into the Education Enhancement Fund. These funds are then allocated based on a statutory formula to K-12 Education, Two-Year Colleges and Four-Year Institutions of Higher Learning.
Elasticity - A measure of tax adequacy that describes whether or not a tax produces revenue growth faster or slower than the economy.
Enacted Budget Bulletin - Prepared by the Legislative Budget Office, this book is a summary of what the Legislature appropriated to each agency during the Legislative Session. The appropriations listed were passed by the Legislature and have been signed into law by the Governor.
Executive Budget Recommendation - Prepared by the Office of Budget and Fund Management, this book gives the Governor’s recommendation for a balanced budget for the upcoming fiscal year. It usually includes a letter to the Legislature that explains the Governor’s priorities for the budget. In some states the Governor’s budget is the basis for the budget later enacted by the Legislature, but in Mississippi the Governor’s budget is advisory.
Exemptions - Exemptions reduce the amount of taxes owed. Income taxes usually allow exemptions for each taxpayer, and property taxes often allow part of a home’s value to be exempted from tax.
Federal Funds - Federal Funds are earmarked by the U.S. government for specific state programs. They are appropriated annually by the Mississippi Legislature, but must be spent in keeping with federal rules. Depending on the federal rules associated with each program, the Legislature may have more or less flexibility in how the funds are spent.
Fiscal Note - A fiscal note provides an estimate of the revenues gained or lost for a proposed change in law.
Fiscal Year - The yearly accounting period for which budget decisions are made. The fiscal year for the state of Mississippi extends from July 1 of one year to June 30 of the next. A fiscal year is referred to by the calendar of the year in which it ends. For example, FY 2011 began on July 1, 2010 and ended on June 30, 2011.
Franchise Tax - Mississippi charges a franchise tax on businesses operating in the state at a rate of $2.50 per $1,000 of the value of resources invested in the State. The minimum franchise tax to be paid by corporations in our state is $25. Corporations pay the franchise tax on top of their corporate income tax liability.
Governor's Budget Recommendation - The Governor submits a balanced budget recommendation for the upcoming year to the Legislature and agency heads by November 15th. This budget must not exceed 98% of the jointly adopted General Fund revenue estimate plus any balance that will remain from the current year's budget.
Health Care Expendable Fund - The Health Care Expendable Fund was created to receive transfers from the Health Care Trust Fund that are authorized by state stature. As a result of the lawsuit won against tobacco manufacturers, the Health Care Trust Fund receives the court-ordered payments due to our state. These funds can only be appropriated for health-related purposes.
Joint Legislative Budget Committee - The Joint Legislative Budget Committee (JLBC) is composed of 14 legislators, half from the Senate and half from the House of Representatives. The Committee is chaired by either the Lieutenant Governor or by the Speaker of the House of Representatives and the chairmanship alternates between them on an annual basis. In the Senate, the Chairman of the Senate Finance Committee, the President Pro Tempore and the Chairman of the Senate Appropriations Committee are standing members of the JLBC. The Lieutenant Governor names three additional members of the Senate to the Committee. In the House, the Chairman of the Ways and Means Committee and the Chairman of the Appropriations Committee are standing members. The Speaker of the House appoints four additional members of the House to the Committee. The staff of the JLBC is called the Legislative Budget Office (LBO).
Joint Legislative Budget Committee Recommendation - The JLBC must submit its balanced budget recommendation to the Legislature and to agency heads by December 15th. Like the Governor, the Committee can consider only 98% of revenue forecast plus surplus balances. The JLBC’s recommendation is used as the starting point for debate on appropriations bills.
Lapse - The unexpected portion of any General Fund appropriation which is returned (or lapsed) back to the General Fund at the close of the fiscal year.
Lapse Period - The two-month period ending August 31 during which obligations outstanding t June 30 may be liquidated against appropriations of the previous Fiscal Year under provisions of Section 64 of the State Constitution.
Legislative Budget Report - Prepared by the Joint Legislative Budget Committee, this book gives the Committee’s recommendation for a balanced budget for the upcoming year. It is generally used as the starting point for the appropriations bills that will be debated by the Legislature in January. For each General and Special Fund agency, it includes appropriations numbers for three fiscal years: (1) It indicates how much was spent during the most recently completed fiscal year, (2) the amount appropriated for the current fiscal year, and (3) the amount the agency and the committee request for the upcoming fiscal year.
Legislative Session - The Legislative Session convenes during the first week of January and closes around April 1st. Draft bills are divided between the House and Senate Appropriations Committees and further divided by subcommittee, usually by agency function. During the Legislative Session, the Legislature may decide to suspend the law requiring the 2% be set aside. Then both houses must adopt the conference reports on the appropriations bills (generally 5-6 days before the end of the session). If approved, the bills are sent to the Governor for his signature.
Major Objects of Expenditure - This term refers to the nine expense categories used within the statewide accounting system. These nine categories are as follows: (1) Salaries; (2) Travel; (3) Contractual Services; (4) Commodities; (5) Capital Outlay—Other than Equipment; (6) Capital Outlay—Equipment; (7) Capital Outlay—Vehicles; (8) Capital Outlay—Wireless Communication Devices; and (9) Subsidies, Loans and Grants.
Mississippi Department of Employment Security - The Mississippi Department of Employment Security (MDES) is a federally funded state agency. The programs of MDES, under direction of the governor of Mississippi, report to the federal government.
Mississippi Development Authority - The Mississippi Development Authority (MDA) is the state of Mississippi’s lead economic and community development agency, engaged in providing services to businesses, communities and workers throughout Mississippi. The agency works to recruit new business to the state and retain and expand existing Mississippi industry and business. MDA also provides technical assistance to the state’s entrepreneurs and small businessmen and women and oversees programs that support Mississippi’s minority and women-owned businesses. In addition, the agency provides Mississippi’s corporate citizens with export assistance, manages the state’s energy programs and oversees programs that help its communities become more competitive. The agency works to promote tourism to the state and develop and support Mississippi’s tourism industry, as well. Additionally, MDA is responsible for managing $5.4 billion in federal Hurricane Katrina disaster recovery funds, economic stimulus funds and other federal programs for the state of Mississippi.
Mississippi State Legislature - http://billstatus.ls.state.ms.us/
Mississippi State Personnel Board - The Mississippi State Personnel Board has under its purview more than 31,000 employees who serve the State of Mississippi each day.
Mississippi’s Tax Threshold - The level of income at which Mississippians start paying income taxes.
Nexus - The minimum level of contact that a business must have in a state in order for its activities to be taxable in that state.
Non-Recurring Fund Transfer - A non-recurring fund transfer is a transfer of funds for a one-time expense that is unlikely to happen again.
Office of Financial Reporting - The Office of Financial Reporting is the financial reporting office for the State of Mississippi. Office of Financial Reporting staff is listed at the bottom of the page. The Office's responsibilities include: Preparing the State of Mississippi's Comprehensive Annual Financial Report (CAFR); Performing financial reconciliations of all state accounting functions between the Statewide Automated Accounting System (SAAS), Statewide Payroll and Human Resource System (SPAHRS), State Treasury and other control agencies; Assisting state agencies in matters concerning governmental generally accepted accounting principles (GAAP), including preparation of all state agencies’ financial statements (GAAP packets); Maintaining the Mississippi Agency Accounting Policies & Procedures (MAAPP) manual; Distributing financial reports necessary for fiscal management at both the individual agency and statewide level; Prepare and file the W2s for all state employees processed through SPAHRS; and Preparing and file 1099s for the majority of state agencies; maintain SAAS master tables (i.e. agency, fund, provider, bill, ship, etc.).
Performance Evaluation and Expenditure Review - The Performance Evaluation and Expenditure Review (PEER) Committee has been reviewing the state’s public entities and making recommendations to improve Mississippi government since 1973.
Performance Measures - Our state budget uses statistics to quantify the results achieved by all government programs. Performance measures are included in agency budget requests and in appropriation bills for the majority of the State General Funds. The three types of performance measures are utilized with our state budget system are: 1- Program Outputs (Volume); 2- Program Efficiencies (Cost per Unit); and 3- Program Outcome (Results/Quality).
Progressive Tax System - A tax system is progressive if persons with higher incomes pay a greater percentage of their income in taxes than those with lower incomes. Most income taxes, including the federal income tax, are designed to be progressive.
Proportional Tax System - A tax system is proportional if all persons, regardless of income level, pay the same percentage of their income in taxes. Flat taxes are proportional.
Regressive Tax System - A tax system is regressive if persons with lower incomes pay a higher percentage of their income in taxes than those with higher incomes. Sales taxes are generally regressive because families with lower incomes tend to spend a larger fraction of their income on taxed goods than do higher-income families.
Revenue - The state’s income from any source. Mississippi revenue includes: tax collections, fees, and intergovernmental grants.
Revenue Estimate - The Revenue Estimating Committee examines economic trends and develops an estimate of the amount of revenue the state will collect from existing sources in the next fiscal year. Its assumptions are based on current economic indicators and their opinion about the economy’s growth potential. The Committee submits the estimate for approval by the Governor and the Joint Legislative Budget Committee. If adopted, the revenue estimate serves as the baseline for all appropriations in the upcoming fiscal year.
Revenue Estimating Committee - Examines economic trends and estimates the amount of revenue that the state will collect in the next fiscal year.
Sales Taxes - Sales taxes are charged on the purchase of goods. Mississippi taxes most goods at a rate of 7%. Our sales tax on goods includes all retail purchases of tangible personal property including, but not limited to groceries, clothes, toiletries and over-the-counter medications. The state also charges a 5% sales tax on automobiles.
Special Taxes - Special taxes are placed on certain businesses, such as casinos, and certain goods, like gasoline. Some Special Funds are supported through special taxes. For instance, regulatory/licensing agencies charge licensing fees and assess fines, which go to support their operation. The Medical Licensure Board and the Board of Dental Examiners are two agencies that receive funding through licensing fees. The Department of Transportation is an example of a Special Fund agency that derives some of its funding through a tax on gasoline.
Stability (of tax revenue) - A measure of tax adequacy that describes whether or not a tax grows at a predictable rate.
State General Funds - General Funds come from general state tax collections (mainly income and sales taxes) and pay for many key services provided by the state, including K-12 education, colleges, universities and corrections. The Legislature has significant discretion about how these funds are spent.
State Gross Domestic Product - State Gross Domestic Product (State GDP) is a measure of the total income produced in our state in a given year, including salaries, dividends and interest. As a measure of Mississippi’s income, State GDP is useful for determining how much our state can afford to spend on public priorities.
State Special Funds - Special Funds are established through state statute or constitutional provisions that earmark funds for a specific purpose.
State Support Funds - These funds include both State General Funds and State Special Funds.
Strategic Plan - A strategic plan is a 5-year plan prepared by an agency that establishes long-range goals for the agency and a course of action to achieve those goals. Strategic plans are submitted by each state agency along with their annual budget request.
Structural Deficit - A situation in which a government’s tax structure is not designed to collect increased revenue to pay for increased costs of services. In states with a structural deficit, revenues do not grow at the same rate as the costs of providing government services. If revenues do not keep up with these increased costs, the state must either raise taxes or cut services.
Supplemental Nutritional Assistance Program - Supplemental Nutritional Assistance Program (SNAP) is a federal nutrition program that helps low-income households pay for food. SNAP was formally known as the Food Stamp Program. SNAP benefits can be used to purchase food at grocery stores, convenience stores and some farmer’s markets and co-op food programs.
Tax Expenditure - A targeted tax cut provided to particular groups of individuals or businesses. Tax expenditures allow persons and or businesses to pay less in tax—in essence providing them with resources without using direct appropriations. Tax expenditures are usually less visible than other types of public spending and are not required to be reviewed annually like direct appropriations. This makes it harder for policymakers and the public to evaluate them.
Tax Fairness - The main area of thought on tax fairness is the ability to pay principle. Based on this principle, taxes can be categorized into three types: (1) Progressive: A tax system is progressive if persons with higher incomes pay a greater percentage of their income in taxes than those with lower incomes. Most income taxes, including the federal income tax, are designed to be progressive. (2) Proportional: A tax system is proportional if all persons, regardless of income level, pay the same percentage of their income in taxes. Flat taxes are proportional. (3) Regressive: A tax system is regressive if persons with lower incomes pay a higher percentage of their income in taxes than those with higher incomes. Sales taxes are generally regressive because families with lower incomes tend to spend a larger fraction of their income on taxed goods than do higher-income families.
Tax Incidence Analysis - Provides an estimate of how different income groups are affected by a tax or proposed tax change.
Tobacco Control Fund - This fund was created for the support of our state’s tobacco cessation programs. It began as a result of the lawsuit won against tobacco manufacturers and receives a portion of the court-ordered payments due to our state.
Transparency - The transparency of a tax system indicates whether or not information about the tax system is easy to obtain. Available information should include who and what is taxed, the process for making tax decisions and how the funds collected are spent. Some states with high transparency use tools like fiscal notes and tax incidence analysis.
Use Tax - This tax applies to items that are purchased outside of Mississippi for use in our state. The use tax is designed to prevent state residents from avoiding the sales tax by purchasing goods in other states. Residents who purchase goods in other states are legally required to report and pay tax on those purchases. Every state with a sales tax also has a use tax.
Vertical Equity - The measure of tax fairness that describes how a tax system treats people at different income levels. When you describe a tax system as regressive, progressive, you are making a statement about vertical equity