Final answer:
The largest source of revenue for most Texas cities is property taxes, making up about 72 percent of total tax revenue for local governments.
Step-by-step explanation:
Primary Source of Revenue for Texas Cities
The largest source of revenue for most Texas cities is property taxes. Based on the provided references, while federal transfers and sales taxes contribute to local government funding, property taxes comprise a significant portion of local revenues. Specifically, in 2018 property taxes accounted for approximately 72 percent of total tax revenue for local governments. This source of revenue is directly tied to the value of residential and commercial real estate within the city limits.
State revenue systems can vary widely, with some states leaning more on property taxes, while others on sales tax or income taxes. In Texas, the absence of a state income tax shifts a greater reliance onto sales and property taxes. Sales taxes are collected by businesses from consumers and then a portion is remitted to the state. However, the single most significant source for local funding remains property taxation. Federal and state grants also contribute to local budgets, but primarily, it is the recurring property tax that fuels Texas cities' budgets.
Therefore, the final answer: The largest source of revenue for most Texas cities is D. property taxes. This is evident from the data indicating property taxes as a pivotal fiscal pillar for local city budgets.