Ninety days into the oil price slump of 1986, Texas, Louisiana and Oklahoma, producers of most of America's energy, have fallen into such economic disrepair that recovery may take years, even if petroleum prices stabilize. The damage extends beyond the oil and gas industry, threatening many academic, social and cultural advances made in the last decade.
Prices dropped steadily from $28 a barrel at year's end and fell briefly below $10 before rebounding to more than $12 this week. The regional recession brought on by sharply diminished oil and gas revenues has affected state and municipal services, social welfare programs and the basic institutions of modern society: universities, public schools, libraries, teaching hospitals, museums and symphonies.
In New Orleans, the city government is anticipating closing all 11 branches of its public library system. The library board already has voted to shut three branches, including two in the inner city and a third in the silk-stocking district in a historic St. Charles Avenue home recently renovated for $1 million.
"I haven't seen New Orleans this way since I was a child in the 1930s," said Ruth McCusker, chairman of the New Orleans Public Library Board. "It sure takes a lot of the fun out of public service. It's not looking real good around here. People are out on the street. It is depressing."
In the Texas Panhandle towns of Pampa and Borger, where dozens of oil rigs have shut down and half the shops along the main streets are closed, public schoolteachers recently received contracts that call for salary cuts next year of $1,000 to $3,000. The school board said hard times in the local oil industry meant that teachers would not get their usual supplement to the minimum state salary.
"The teachers in Texas have gone through so much already," said Bill Potts, an algebra teacher at Pampa High School. "We've had to pass tests to keep teaching; we've had to deal with all the bureaucracy of the educational reform bill. To be faced with a salary cut after all that, it's been very upsetting to a lot of teachers. This was like the final blow."
In Custer County, Okla., schools Superintendent Richard O'Hara has seen his district's revenue from its share of the gas production tax drop month by month. To make up for the revenue loss, he has drafted plans to cut teacher's supplies by 50 percent, reduce busing, eliminate summer maintenance and cut the staff through attrition and possible layoffs.
"It's terribly frustrating for Oklahoma educators," O'Hara said. "In our district, we were getting some good momentum. Now we're just hanging on, and we're probably going to lose some ground. The state had just adopted maximum student-teacher ratios at 24 to one for grades one through three, and those were supposed to go down each year. We worked hard to reach the ratio, but now that's in jeopardy. It's tough to take, but we don't know what else to do."
At the state level the deficit numbers are staggering, as are the proposed cutbacks in services needed to balance the budgets.
Texas faces a shortage of at least $1.3 billion due to falling oil and gas royalties and sales tax receipts. Louisiana and Oklahoma are expecting deficits of more than $500 million each. In response, Texas agencies are cutting back 13 percent, Lousiana lawmakers are studying 22 percent cuts in some programs and Oklahoma officials are drafting their next budget with across-the-board cuts of at least 16 percent.
While the three states have stiff sales taxes, only Texas does not have an income tax.
"There was a meeting of all the assistant directors the other day, and we were all laughing," said Sam Armstrong, an official at the Oklahoma Department of Human Services. "Then somebody said, 'Hey, what the heck are we laughing about? We should be crying.' But I guess if we didn't laugh once in awhile, we'd lose our brains. We just get more bad news upon more bad news."
Of all the state agencies in the three states, Oklahoma Human Services, which has a yearly budget of $2 billion, faces the most dramatic cutbacks. In the last 90 days, the nine-member Commission for Human Services has voted to:
*Cut $23 million from state Medicaid by eliminating the vendor drug program, in which the state purchased up to three medicines per month for clients, and dropping the Medically Needy program, in which the state helped working families in which a breadwinner suffered a serious illness.
*Reduce Aid to Families with Dependent Children by 5 percent. Last year Oklahoma had raised AFDC payments for the first time since 1979. "We had a lot of catching up to do, but now we're headed backwards again on AFDC," Armstrong said.
*Close one of four state juvenile facilities in Taft and reduce payments to foster home parents, adoption agenices and child abuse centers.
*Cut several million dollars from the state's three teaching hospitals in Oklahoma City.
*Save $20 million in administrative costs by laying off 1,200 of the agency's 12,500 employes (three years ago, it had 14,600 workers) and requiring all employes to take one furlough day a month for the next 14 months.
The cuts in Oklahoma seem definite. Gov. George Nigh (D), who is retiring this year, and legislative leaders say that they are committed to balancing the budget without raising taxes. In Louisiana, the state human resources department has prepared a similarly drastic list of cuts, but Gov. Edwin W. Edwards (D) is hoping to avoid them by persuading the legislature to approve a state lottery, casino gambling in New Orleans and a property tax.
Few expect the entire Edwards proposal to pass, and the deficit in Louisiana may be so great -- some officials say that it could be $100 million more than first anticipated -- that the new revenue sources would not make up the difference.
"My prediction is that the shortfall will be so great and the proprietary interests of individual legislators will be so strong on their own special programs that they will be unable to agree among themselves on cuts to offset the shortfall," said Ralph Perlman, state director of budget and fiscal management. "They'll go through the legislative session without settling it, and they'll have to go back for a special session." The regular session begins in two weeks.
Most state agencies anticipate severe cuts. The university system, headed by Louisiana State University and serving 151,000 students, is preparing to receive $36 million less from the state than last year. To compensate, the state Board of Regents will raise nonresident tuition, reallocate fees once spent on intercollegiate athletics, eliminate fee waivers for National Guard veterans and seniors and install 4 percent cuts across the board.
"We've had eight cuts in the last five years in higher education in Louisiana," said Carol Colpharp of the state Board of Regents. "It has been absolutely crippling, and now it's only getting worse. We're losing faculty something awful, and more students are talking about going to out-of-state schools. There are severe morale problems when you end up squeezing nickels to save pennies. We thought that the people of Louisiana were ready to make education a real priority."
Louisiana passed West Virginia in February as the state with the highest unemployment rate, 13.2 percent.
The University of Texas system, which yearns to be considered a world-class institution, is finding it more difficult to attract scholars and researchers. Like all other state agencies, the university was asked by Gov. Mark White (D) to cut expenses 13 percent this year. The most significant cut, intended to save $22 million, is a modified freeze on hiring and promotions.
"We're making all the cuts we can without impairing the faculty," said Gerald Hill, vice chancellor for governmental affairs. "The modified freeze does not mean departments can't hire and promote. It means that if you have a critical need, fill it. If it's not critical, let it slide for a time. The general feeling is protect the current faculty at all costs. We hope to get them 6 percent raises again next year, and the fast-burners should get more than that."
Hard times seem to bring out the best and worst in people and institutions, and that has been the case in Texas, Oklahoma and Louisiana this year. Competition for the dollar has increased, sometimes creating intense battles, but there is often a strong sense of sharing. All of that has been evident in Oklahoma.
With the state department of education preparing to reduce aid to local school districts, different parts of the state are trying to portray other parts as less worthy. Last week, Oklahoma City newspapers attacked the school district in Cheyenne, a town of 1,700 in western Roger Mills County, for having a $1 million surplus while eastern districts were going broke.
"It's pathetic, the campaign they've waged against us," said Superintendent Galeand Roper. "That's not a surplus. It's money we were going to use to build a new auditorium. Our old one's been condemned by the fire department. But those people over in Oklahoma City are really on my case about it.
"We found deep gas in this region 10 years ago, and now it's been the biggest producer in the state. Before that, we were the poorest. We had the sorriest facilities of anyone around. Now we got some money, and those folks just can't stand it. It's like the fat hogs, as long as they got enough corn, they leave some for the little hogs. But when the fat hogs can't get enough, they don't want the little hogs to have any."
In Tulsa, meanwhile, as government services diminish, more people down on their luck are turning to Neighbor for Neighbor, a nonprofit social services agency in operation for 18 years. Last year, Neighbor for Neighbor served a record 22,000 people, helping them pay for rent, transportation and obtain free medical and dental care. After three months in 1986, Neighbor for Neighbor is 1,300 clients ahead of last year's pace.
"We're seeing more and more in the middle-income family bracket," said Diane Gower, assistant to the director. "Some are unemployed, some are working at minimum wage. We have a lot where husband and wife are working McDonald's and Arby's type jobs, and it's difficult for them to make it. Some had good jobs and lost them. Oil has made this whole part of Oklahoma a disaster area. But there is still a strong spirit to help each other. That's what life's for.