This report estimates that state tax revenue grew 8.7 percent from fiscal year 1999 to fiscal year 2000. If adjusted for the effects of legislated tax changes, state revenue growth would have been an even stronger 9.4 percent. This is by far the highest adjusted or unadjusted annual growth ever recorded by the Rockefeller Institute. When inflation is considered, the increase is 6.0 percent, making real revenue growth in fiscal year 2000 slightly less than the real revenue growth of 6.7 percent in fiscal year 1998, but still quite strong by historical standards. Fiscal 2000 had the highest revenue growth in the last 9 years, both in adjusted and unadjusted terms. Revenue growth was much stronger than the states' projections at the beginning of the budget cycle. Meanwhile, tax cuts reduced revenue growth by less in fiscal year 2000 than in the previous 2 years. There are some signs that revenue growth is slowing in fiscal year 2001, which may put more of a pinch on state budgets. (DFR)