NCPA - National Center for Policy Analysis

States Overestimate Revenue, Now Look to Fill Gap

March 3, 2011

Revenue forecasts made by America's state governments are increasingly missing the mark, a trend that is aggravating political, fiscal and social pain as most of the 50 states grapple with budget shortfalls, says Reuters.

Lawmakers and governors are now in budget-writing season and are looking at forecasts that revenue across all 50 U.S. states will be at least $100 billion shy of costs in fiscal 2012, which begins for most states on July 1.

  • According to a study released on Tuesday by the Pew Center on the States, the states as a group overestimated revenue by at least 10.2 percent in fiscal 2009 -- the first full fiscal year of America's worst recession in generations.
  • Twenty-five percent of all state government forecasts fell short by 5 percent or more during the 1990-1992 economic downturn; 45 percent of forecasts were off by that much in 2001-2003; and 70 percent of all forecasts were too high by at least 5 percent in fiscal 2009.
  • Sales taxes came in 7.6 percent lower than forecast in 2009, compared to an error rate of 0.3 percent over 23 years.

Source: Michael Connor, "States' Revenue Forecasts Increasingly Off-Base," Reuters, March 1, 2011.

For text:

For study:


Browse more articles on Tax and Spending Issues