Question

When taxes are not collected until the middle or the end of the year, how does the state pay its operating obligations in the first few months of the year?

Answer 1

The state can pay its operating obligations in the first few months of the year by borrowing money and through intergovernmental revenues.

Step-by-step explanation:

In the first few months of the year, when taxes are not yet collected, the state can still pay its operating obligations through various methods.

One way is by borrowing money. When the government runs a budget deficit, it can borrow money through bonds or loans to cover its expenses until tax revenue is collected.

Another way is through intergovernmental revenues. The federal government shares some of its revenue with state and local governments to fund specific areas such as welfare, healthcare, and education.