CMFO Complete Practice Exam – Prepare for Your Test 2026

The correct choice emphasizes the critical role that tax revenues play in financing essential services and infrastructure improvements within a local government budget. Tax revenues collected from residents and businesses provide the necessary funding for a wide array of public services, including education, public safety, sanitation, road maintenance, and health services. Additionally, these revenues support infrastructure development, such as building and maintaining roads, bridges, and public facilities, which are vital for community functioning and growth.

Tax revenues are thus foundational to local government operations, ensuring that they can effectively meet the needs of their citizens and invest in the community's future. The other choices do not represent the primary or appropriate functions of tax revenues in local government budgeting. Non-profit organizations and local sports programs are typically funded through donations, grants, or separate funding mechanisms rather than directly reliant on tax revenues. Moreover, the diversion of funds into personal accounts is illegal and undermines the purpose of public taxation, which is to support the greater community rather than individual financial gain.