BOSTON, DEC. 31 -- When Gov. Michael S. Dukakis (D) took over from a Republican, the economy was spiraling downward and the state budget was mired in red ink.

Sixteen years later, Dukakis passes the reins to another Republican and returns the fiscal favor. The economy is in the cellar and Gov.-elect William Weld faces painful budget cuts or tax increases.

Dukakis promised no new taxes in his 1974 gubernatorial campaign. And when he took office he adopted as a symbol a meat cleaver that he said would be needed to cut state government down to size.

But the state was in deep financial trouble. A modest surplus of six months earlier became, early in 1975, a deficit of between $350 million and $500 million -- of a total budget of about $3 billion.

Less than a year after taking office, Dukakis had to eat his campaign promise and back the largest tax increase in the state's history.

The parallels in Massachusetts today are startling. Oil prices are again on the rise, pushed by a different Mideast crisis. Unemployment is increasing, though it has not yet reached the double-digit levels of the mid-1970s. And once again, the problems confronting Massachusetts coincide with a national economic slump and with similar fiscal crises elsewhere.

Dukakis disputes those who predict he will leave behind a large deficit. "There is no comparison," Dukakis said in an interview. "In 1975 we were looking at a budget deficit that was 25 percent of the total."

Still, some state legislators have estimated the state will wind up about $300 million in the red at the end of the fiscal year next June. Weld said this week his advisers put the deficit as high as $750 million. He, like Dukakis, promised no new taxes during his campaign.