JOURNAL ARTICLE
Is There a Gold Standard or Need for a City-Centric Approach for Sales Tax Revenue Forecasting
- Title:
- Is There a Gold Standard or Need for a City-Centric Approach for Sales Tax Revenue Forecasting
- Authors:
- Larson, Sarah Overton, Michael
- Year:
- 2025
- Output Type:
- Journal Article
- Venue:
- Public Finance Journal
- Venue Type:
- Peer-reviewed journal
- Status:
- Published
- Theme:
- Municipal Finance and Budgeting
- Sub-theme:
- Forecasting
- Shared Trajectory:
- Sales Tax Revenue Forecasting
- Abstract:
- The accuracy of sales tax revenue forecasting is essential for local governments, as they rely on these forecasts to develop their annual budgets. Previous research has focused on identifying gold-standard forecasting methods with high average accuracy across multiple cities. However, such approaches may still produce inaccurate predictions for specific municipalities, making this scholarship less relevant to practitioners. Our research addresses the gap in the existing literature by focusing on the relative accuracy of forecasts from the municipal perspective rather than the overall average accuracy across all municipalities—a city-centric approach—to identify variations in various machine learning and traditional revenue forecasting methods. Here, we show that following the steps of PREE: (P) prepare, (R) run multiple models, (E) evaluate against benchmarks, and (E) evaluate overall performance can help to maximize the accuracy of sales tax revenue forecasting at the municipal level. The high variability in model performance across municipalities highlights the risks associated with relying on a single gold-standard forecasting approach. Instead, practitioners should focus on forecasting processes, such as PREE.
- Topics:
- Revenue forecasting Sales tax Municipal finance
- DOI:
- https://doi.org/10.59469/pfj.2025.45
- Citations (OpenAlex):
- 1
- Open Access Copy:
- https://doi.org/10.59469/pfj.2025.45
- OpenAlex ID:
- W4410873183
- Full Citation:
- Larson, Sarah and Michael Overton. (2025) "Is There a Gold Standard or Need for a City-Centric Approach for Sales Tax Revenue Forecasting." Public Finance Journal, 2 (2), 99-120. https://doi.org/10.59469/pfj.2025.45
Cite this work
Published
Reference
Larson, Sarah; Overton, Michael (2025). Is There a Gold Standard or Need for a City-Centric Approach for Sales Tax Revenue Forecasting. Public Finance Journal.
@article{larson2025_is_there_a_gold_standard,
title = {Is There a Gold Standard or Need for a City-Centric Approach for Sales Tax Revenue Forecasting},
author = { Larson, Sarah and Overton, Michael },
year = {2025},
journal = {Public Finance Journal},
doi = {10.59469/pfj.2025.45},
url = {https://www.michaeloverton.net/research/items/is_there_a_gold_standard_or_need_for_a_city_centric_approach.html}
}