Federal dollars, not state taxes provide the largest source
of state revenue today, the upper chart shows. But federal dollars get
spent largely according to federal program guidelines, not decisions by
state government. The lower chart shows only revenue raised and spent
at Texas' discretion. Taxes on sales, including vehicle and fuel sales,
contribute more than half of the discretionary budget. Revenue from oil
and gas taxes and land income (much of it generated from oil and gas
leases) has declined dramatically, replaced only partially by revenue
from new sources such as the lottery and new or increased revenue from
licenses, permits, fees, fines, and penalties.
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