The two key differences between local/state and federal budgets
are given below-
- State and local governments are required to balance their
budget. They have no way to borrow, unlike central government which
can borrow to cover its deficit. So, central budget can have a
deficit while local/state government cant.
- The second main difference is in the way revenue is collected.
Although the federal government collects the most tax revenue,
state and local governments have a greater range of revenue options
for funding their budgets. The federal government relies mainly on
income, capital gains, excise and Social Security taxes for
revenue. State and local governments collect sales taxes, fuel
taxes, property taxes and fees from special licenses, such as
driver's licenses. In addition, many state and local governments
collect revenues from state lotteries, alcohol and tobacco taxes,
and in some cases, casino gambling.
What I would change is that I would make fuel tax as a shared
tax. Since fuel, as a resource, is property of both state and
federal government. When imported, the deficit is also being borne
by the federal government. So it makes sense that fuel tax is
divided between local/state and federal government.