ABSTRACT
Contents Introduction ....................................................................................................... 44 Louisiana: Th e Economy and Revenue Forecasting, the 1970s and 1980s ...........45 Th e Revenue Estimating Conference in Louisiana ..............................................51 Forecasting Revenues in the Midst of Katrina and Rita ......................................55 Summary and Conclusions ................................................................................ 60 References .......................................................................................................... 60
Introduction State governments rely on revenue forecasts to establish short-and long-term budgets. Th irty states plan their budgets once every year, whereas thirteen have a biennial budget with the state legislatures meeting annually, and seven states have biennial budgets and legislative sessions.* But, in both cases, the states have made fi nancial obligations to education, highways, public safety, and other state responsibilities based on the best revenue estimates available. Or, the states have made commitments to reduce taxes on their citizens with the belief that the revenues available, after the tax reduction, will be suffi cient to fund desired public services. Th e bottom line is that states have to rely on some form of revenue forecasting to establish a budget for the next one or two fi scal years. Bad revenue projections can be a disaster for a state, especially if the revenue projections are too optimistic. States can usually adjust to surpluses with ease, but most states have a more diffi cult time adjusting to major shortfalls in incoming revenues. In other words, cutting the state budget mid-year is typically a political crisis.
