States reported solid revenue growth in the fourth quarter of 2020, but there is large variation across states and across revenue sources. Over a nine-month period (April through December 2020), state total tax revenues declined 2.2 percent compared to the same period one year earlier.

Overall state tax revenues were stronger during the pandemic than initially feared, in part because of the generous federal stimulus packages that have injected trillions of dollars into the economy. Despite a more positive fiscal and economic reality than initially feared, states continue to face fiscal uncertainties and states still need to be conservative in their budget and forecasting because of the high level of uncertainty remaining.