Hazardous materials are grouped into classes identifying their:

C. State income taxes

Explanation:

State lottery funds are money that the local state government gets from lottery companies. This is a source for revenue because state governments can make millions of dollars from these corporations. The state sales tax is collected and is given to the state government, which results in tens of billions of dollars. Federal allocated funds are not the answer because they are money given by the government so the state can increase it's revenue.

The answer is state income taxes.