Checks on Other Branches In many states the legislature must approve officials and judges appointed by the governor. They also examine how well executive agencies- departments, committees, boards, and offices of the executive branch are doing their jobs. Moreover, they are provided with the power to impeach executive and judicial officers in a similar process followed in Congress.

 Taxes are the primary source of revenue for states- more than 50%. The funds are generated from two forms of taxes: 1. Sales Tax 2. Income Tax  Sales Tax: Many states have two types of sales tax on goods or services purchased within the state. 1) A general tax placed on all goods and services within the state. Usually it is a percentage of the price of the product. In Ohio, the tax varies from one county to another. On April 1, 2012 the sales tax in Stark County will increase from 5.75% to 6.25%. So the price of a $20 dollar t-shirt will be a total of $21.25….an increase of 10 cents.

2) An excise tax on specific goods: tobacco, gasoline, and alcohol. In Ohio a pack of 20 cigarettes is taxed $1.25 (Federal taxes also apply)and when purchased in Cuyahoga County, an additional $.345 tax is added.

Income Tax: Most states tax income on what a person or business earns. Ohio has a 9 income tax brackets with minimum of 0.59% a max of 5.92%. States also impose other taxes or user fees for services and products. Example: Lumber and mining companies are charged a severance tax on timber, gas, and oil taken from the land. All states have fees for obtaining licenses including hunting, driving, fishing, and when registering a pet.

States can choose which taxes they wish to use. Montana has no state sales tax. Texas has no state income tax. Alaska relies on natural resources so it has high severance taxes. Ohio doesn’t tax most food products while Pennsylvania doesn’t tax clothing.

Federal Funds States have also turned to Congress for money. Money is often provided in two forms. 1. Categorical Grants 2. Block Grants Categorical Grants: given for specific purposes such as job training and highway construction. They often have “strings attached” or conditions that must be met in order to receive money.

EXAMPLE: July 17, 1984 the National Minimum Drinking Age Act of Required all states to raise the age of consumption and public possession of alcohol from 18 to 21. Under the Federal Highway Act, any state that continued to have a drinking age below 21 would receive a 10% reduction in its annual federal highway funds.

Block Grants: Provided for general purposes. A categorical grant could be obtained to fund health care for the homeless, while a Block grant could be used for health care in general. Those in favor of block grants claim that it gives governors and state legislatures more control over how and where the money is spent.

States can borrow money by selling Bonds. Bonds are certificates people buy from the government in which the government agrees to pay back the cost, plus interest after a set period of time. States often use this method to raise money for constructing a school or convention center.

State lotteries also provide funds to states. 60% of the cost of a lottery ticket goes to toward the prizes, the remaining 40% goes to the state- often for education programs.

Lotteries are often used to fill the gap between tax revenues and the cost of state programs. However, in most states no more than 5% of the total revenue comes from the lottery and it cannot “bridge the gap”. Opponents to the lottery claim that any form of gambling is wrong and that it targets those who can least afford it- the poor.