“States’ Revenue Estimating: Cracks in the Crystal Ball sheds new light on an understudied aspect of the budget gaps that nearly all states have faced during the Great Recession: revenue estimating errors. The Pew Center on the States and The Nelson A. Rockefeller Institute of Government partnered to undertake this analysis of 23 years of data on personal income, sales and corporate income tax estimates and collections. The results reveal that the states regularly misestimate revenue and that those errors are significantly greater in times of fiscal crisis. The troubling, long-term trend is that overestimates have gotten larger during each of the past three economic downturns, and more states have made them. This report discusses the causes of this trend and describes practices some states have adopted to achieve greater precision…Research…shows that in fiscal year 2009, the errors by states in forecasting personal income, sales, and corporate income tax collections added up to a $49 billion unexpected revenue shortfall.1 In a year in which state lawmakers faced $63 billion in midyear budget gaps—coming atop $47 billion they had already closed when crafting their budgets—the missed forecasts contributed to the need for tough and unexpected choices to cut spending, increase taxes, draw from reserves and borrow money.”