Media Coverage

A Tax Cut May Carve Into the Budgets of 19 States

03/01/2011 - Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama signed in December, according to a report released Tuesday.


The unexpected tax change is just one example of how difficult it can be for states to perform one of their most important tasks: guessing how much money they will collect in the coming year, so they will know how much will be available to spend.

Those educated guesses, known as revenue estimates, were the subject of another report released Tuesday by the Pew Center on the States and the Nelson A. Rockefeller Institute of Government Institute of Government. It found that errors in those revenue estimates have grown progressively worse during the last three fiscal crises, and that during the first year of the Great Recession states overestimated the amount of money they expected to collect by $49 billion, leading to difficult midyear budget cuts. Some states were off by more than 25 percent, it found.

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States' Fiscal Health

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