The people of this city awoke this morning to headlines that said Texas was plummeting deeper into a financial hole due to the decline in oil prices, prompting the governor to issue another call to slash state spending, while his deputy called for a tax increase. And those lucky enough not to be among the 86,400 non-farm workers who have lost jobs since Jan. 1, had to deal, as the day wore on, with 100-degree temperatures.

But tonight, for a few hours at least, the bleak summer was put on hold and Houston held a party. Singing and dancing, stomping and hooting, 1,700 musicians, twirlers and dancers joined an Astrodome crowd of 32,401 in welcoming approximately 3,000 U.S. Olympic Festival athletes with opening ceremonies lasting nearly three hours.

Two of Houston's more gifted athletes, sprinter Kirk Baptiste and gymnast Kristie Phillips, carried the Olympic Festival Torch on the final leg of its 4,600-mile course from Colorado's Pikes Peak. Formerly of the University of Houston, Baptiste won a silver medal in the 1984 Olympics, finishing the 200 meters just behind fellow Houstonian Carl Lewis, who carried the U.S. flag tonight while leading the athletes onto the field. Both Baptiste and Lewis are scheduled to compete in the festival.

Joe Story, a member of the 1984 Olympic team handball squad, took the Oath of the Athletes. These games began in 1978 as the National Sports Festival, designed to help the U.S. Olympic Committee develop future Olympians. Story has been in all seven festivals. (No fesitval is held in an Olympic year.)

The 10-day series of events, which will get into full swing Saturday, includes 34 sports. The variety of music and musicians at the opening ceremony was almost as numerous. A 12-year-old girl sang the national anthem and later there was a tribute to the late Benny Goodman. Prior to a bit of Goodman's swing, Jose Feliciano sang. Chuck Berry then performed (with the help of 16 growling motorcycles) and then Otis Day and The Knights got the crowd moving with their rendition of "Shout." The Beach Boys followed the torch lighting.

The principals in this event sauntered in clad in the uniforms representing East, West, North and South. As one would expect, the separate delegation of Texas athletes received the biggest applause.

Ernest Deal, chairman of the local organizing committee, which financed much of the cost of the festival through corporate contributions, told the crowd the city is looking far into the future.

"This city wants one gold medal," Deal said. "In 10-12 years, when it's North America's turn again to host the Olympic Games, there is only one place for them to be."

Financially, the festival has finished in the black every year but in 1985, when it was held in Baton Rouge, La. The red ink may not show up this year if ticket sales continue. Although there is a big difference in population between the two cities, more than 200,000 tickets were sold in advance here, whereas only 198,000 were sold for all of last year's festival.