Projections of Local Sales Taxes in Douglas County, 1990-1993

Abstract

Time series regression has been used as a statistical technique to forecast revenues of the one-half percent sales tax collections levied by the City of Lawrence and of a proposed one percent countrywide sales tax. Time series regression is based on a given set of historical data (e.g. sales tax collections) and implies the computation of the best-fitting curve (least square line) which is trended into the future.

The reliability of the forecast series in this report is given within a 95 percent confidence interval. This means that one can be 95 percent confident that the projected values will lie within an interval specified for each forecast series individually (see notes in Tables 1, 3 and 5). While forecasts based on a regression model are fairly reliable one or two years ahead, they become less accurate in the distant future. This is why the forecasting period has been restricted to four years.