The State Board of Equalization yesterday certified official revenue projections for this year and next. Based on actual revenue collections through November and forecasting data for the next seven months, the various agencies involved in generating the certified estimate are projecting General Revenue collections for FY ’10 of $4.414 billion. In the absence of any official forecasts up until now, OK Policy’s policy consultant Paul Shinn developed our own revenue forecasts two months ago based on three months of collections and various economic trends and historical precedents. Our projection for FY ’10: $4.439 billion. (Click here for the forecasting brief and here for the technical memorandum of how the forecast was developed). For those without a calculator at hand, that’s a difference of $25 million, or 0.6 percent. As Adam Sandler might say, not too shabby.

On FY ’11 revenues, we projected General Revenue collections growing to $4.739 billion, while the Board of Equalization certified $4.449 billion. We’ll see whether the revised February certification moves us closer or further apart.

For a newly updated version of our Budget trends and Outlook presentation, which includes our multi-year projections suggesting that revenues will not fully recover to pre-downturn levels until at least FY ’13, click here.

As state leaders struggle with how to manage the enormous budget shortfalls the state faces this year and next, the focus is understandably on decisions that must be made over the coming weeks and months.  But while short-term challenges are the highest priority, this is also an opportune moment to draw some lessons from what has transpired during the downturn thus far that could leave us better equipped to manage the full length of the crisis and respond better the next time the economy takes a nosedive. This post will be the first of a series of blog posts and an upcoming issue brief that will recommend changes to our budget and tax system involving forecasting, reserve funds, multi-year revenue commitments, and tax expenditures. Our proposals are all intended to enhance the Legislature’s ability to respond to budget downturns without having to implement deep cuts to vital state services or enact tax increases. Read the rest of this entry »