Tags: Economic- Crisis | states | downturns | forecast | errors | revenue | Pew

Study: States Flunk Tax Math During Downturns

Wednesday, 02 Mar 2011 12:51 PM

A new study shows that states actually become worse at forecasting their revenues when their economies are doing poorly, the Wall Street Journal reports. In 2009, for example, the 50 states jointly anticipated $49 billion more than they wound up collecting, according to the report released Tuesday by the Pew Center on the States and the Nelson A. Rockefeller Institute of Government.

“During downturns — when it matters more than ever for states to get it right — more states are not only getting it wrong, but making larger errors,” the report concluded.

Arizona, New Hampshire, Oregon, and North Carolina made the least accurate revenue calculations in 2009, with overestimates exceeding 25 percent. The median error for the 50 states was 10.2 percent.

The study found that, conversely, states' estimates run far closer to reality in good times and that, if anything, they understate revenues by a small margin.

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