Many communities today are concerned with their local government’s ability to appropriately manage the taxes it collects. If a government spends more money on expenditures than it collects in taxes, it may end up with not enough money, called deficit. Which of the following could result in a county government budget in deficit?
a.
The government raises sales and property taxes without adjusting expenditures.
b.
The county closes a fire station, reducing expenditures, without adjusting taxes.
c.
The county gives all public school teachers a $2,000 raise without adjusting taxes.
d.
The county collects donations to build a fountain in city hall.
a. The government raises sales and property taxes without adjusting expenditures.
c. The county gives all public school teachers a $2,000 raise without adjusting taxes.
The correct answer is:
c. The county gives all public school teachers a $2,000 raise without adjusting taxes.
This would result in a county government budget deficit because the government is increasing expenditures (by giving raises to teachers) without adjusting taxes to account for the additional spending.