Third Quarter 2011

Toil and Trouble for Revenue Forecasters: Greater sensitivity to business cycles has made state tax revenues more difficult to predict

State revenue forecasts have become progressively less reliable following each of the past three recessions. As capital gains become more unpredictable, tax revenue experts advise states to build larger rainy-day funds.

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Related Links

Mattoon, Richard, and Leslie McGranahan. "Revenue Bubbles and Structural Deficits: What's a State to Do?" Federal Reserve Bank of Chicago Working Paper No. 2008-15, July 2008.

"States' Revenue Estimating: Cracks in the Crystal Ball." The PEW Center on the States and The Nelson A. Rockefeller Institute of Government, March 2011.