State's economy mirrors recession of the 1980s

Sunday, October 13th 2002, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) _ As lawmakers mull state employee furloughs and budget cuts, today's budget crisis mirrors the energy crash of the 1980s that sent revenue spiraling downward.

But back then lawmakers pulled the state out of a budget crisis with more than $1 billion in taxes increases from 1984-90.

``We taxed every damn thing we could think of,'' said Henry Bellmon, Oklahoma's governor from 1987 to 1991.

This year no one is proposing a tax increase.

The adoption of State Question 640 in 1992, which requires voter approval of any tax increases unless three-fourths of the vote in both the House and Senate, appears to make it highly unlikely that lawmakers will be able to raise taxes to help solve the state's fiscal problems.

Two modest tax increases have been proposed since the adoption of SQ 640, and voters rejected both.

The impact on state government this time is similar to what happened in the 1980s, but there are vast differences in the underlying conditions.

Plummeting oil and natural gas prices caused much of the problem in the 1980s. The price of oil dropped from about $37 a barrel to less than $10.

In the 1980s, the state's budget was closely tied to the energy industry, through sales taxes and taxes on oil and natural gas production.

The energy bust, coupled with a national recession, had a devastating effect on the state's economy. There was double-digit unemployment and the greatest number of farm foreclosures and bank failures since the Great Depression.

Today, however, unemployment remains relatively low. Farmers and ranchers aren't suffering as they did 20 years ago, and there have been no bank failures.

``I have no idea,'' former Gov. George Nigh replied when he was asked what was going on. ``This is a reverse situation, and I don't understand it.''

Nigh was the governor when the bottom dropped out in 1982. His first term was a joy, with lots of money to spend on teachers' salaries, roads and other capital improvements.

But a few days after he won a second term in November 1982, the state suffered its first revenue failure and had to cut allocations to state agencies. The reductions continued monthly for more than a year.

Nigh said he and other state officials had some warning that the economy was going south and would hurt tax revenues.

However, ``We didn't see it coming so strong or lasting so long,'' he said. ``The downturn was deeper and lasted longer than the experts predicted.''