Last month, Speaker McNulty proposed cutting an additional 2.75 percent from the budget forecast because previous budget forecasts in the last few years have proven overly rosy, forcing the legislature to make last minute, emergency cuts.
Democrats in the Senate balked at fiscal reality and stuck by the higher projection.
Now a study comes out from the Pew Center on the States and the Nelson A. Rockefeller Institute of Government proving exactly the point that McNulty and House Republicans were making.
In a report Tuesday, economists at the Pew Center on the States and the Nelson A. Rockefeller Institute of Government conclude that states increasingly overestimate their tax revenue during tough economic times. The report’s authors calculate that during the depth of the latest recession in 2009, income forecasts by all 50 states overshot reality by a total $49 billion.
“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 said. The median state overestimated by 10.2% in 2009, with the least-accurate estimates in Arizona, New Hampshire, Oregon and North Carolina, all of which overshot by more than 25%, the study found.
Senate Democrats need to stop looking at the world through rose colored glasses and come to terms with budget realities.
And no, their two month tax amnesty is not going to cover the gap.