The impact of cheaper oil on Texas, the nation's leading energy producing state, was revealed in harsh terms today when state Comptroller Bob Bullock estimated a $1.3 billion revenue deficit for the current two-year state budget.
"Texas is facing a real fiscal crisis, to say the least," said Bullock, who attributed the unprecedented fiscal shortfall to the world oil price war and a resultant decline in the state's collection of oil production, natural gas and sales taxes.
Bullock based his revenue estimates on a staff forecast that oil in Texas would sell for an average price of $21 per barrel in 1986 and drop to $15 by 1987. Slightly more than 20 percent of the state's revenues come from energy production, and when that industry suffers it has an adverse effect on most other revenues, including the state sales tax. There is no state income tax.
The Texas Legislature, which meets every other year, is not scheduled to convene until next January. Gov. Mark White (D), who was in Dallas today testifying on the federal budget, said he sees no need for a special session, and key legislators agreed with that. White and state lawmakers face elections this November.
The crisis is not Texas' alone. Neighboring Oklahoma and Louisiana, are suffering as much or more because their economies are more dependent on oil and gas and their tax bases are far lower.
In Louisiana, the projected budget deficit is $500 million. Gov. Edwin W. Edwards (D) has staked his state's fiscal salvation on a proposed lottery and casino gambling in New Orleans. His gambling proposals were greeted rudely by state business and religious leaders, and enough state legislators opposed them that Edwards backed away from calling a special session to consider them. He is now finishing a two-week tour of the state calling for their consideration during the regular legislative session that begins in April.
The projected deficit in Oklahoma has reached $467 million. Gov. George Nigh (D), announced this week that the shortfall might lead to widespread school closings, state worker layoffs and budget cuts in various state services in the range of 16.5 to 17 percent. Earlier this week Nigh ordered an immediate general freeze on hiring, state purchases and out-of-state travel.
In Texas, Bullock said the revenue problem underscored the need for the state to become less reliant on the energy industry, but he said he had no comment on how the governor and legislature should handle the situation.
"I'll advise them on how much money they don't have. I will not advise them on what to do about it," said Bullock, who added: "I can't be held accountable for what I didn't say."
Agreeing with the governor, State Rep. Stan Schlueter, chairman of the House Ways and Means Committee, said, "This is a long-term problem, something that's been coming on for a long time, and the worst thing we could do is try to deal with it in a 30-day session."
Like most states, Texas operates on a fiscal year system that does not match the calendar year. The state's current two-year budget cycle for 1986 and 1987 will expire in August 1987 so the legislature would have nine months to deal with the accumulating deficit.
Bullock said Texas would be able to handle the deficit between now and January, when the legislature returns, by dipping into state funds dedicated for special purposes, such as parks and highways. By his staff's projections, he said, there will be three or four days next December when the state will be temporarily out of money and "we'll be writing hot checks for a few days."