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Abstract: 

The Great Recession has illustrated how volatile state tax revenues can directly affect the magnitude of state budget shortfalls, with severe consequences in some cases. These consequences might include major structural deficits and credit downgrades. However, some states, despite inherently volatile tax structures, have shown resiliency during the recession by implementing effective policies and practices. This panel will explore the causes and impact of forecasting errors on state budgets as well as discuss best practices for effectively managing the volatility.

Keywords: State budgets, tax structures, forecasting errors, volatile revenues, business cycle management

Affiliations:  1: Northwestern Mutual Investment Management Company; 2: Pew Charitable Trusts; 3: State of Utah; 4: Ramapo College of New Jersey.