• Louisiana has announced general program cuts in response to a fiscal gap estimated at $900 million. The shortfall for next year is estimated at more than $2 billion. The oil-price slump has aggravated economic turmoil previously under way.
• Oklahoma has a $1.3 billion budget shortfall, nearly 20% of last year’s spending. State agencies face cuts totaling 7% in annual state allocations. For example, the public-school budget will be cut by $110 million for the fiscal year ending June 30.
“What’s surprising here is not that what went up has come down, but that so many states—with the devastating boom-and-bust cycle of the last decade still fresh—remain so vulnerable to a natural resources crash,” Saha and Muro write.
In total, Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia, and Wyoming rely on severance taxes for 16% of tax revenue. The US average is 2.1%.
“Such dependency makes such states’ lack of adequate countercyclical stabilizer programs or other structures for smoothing out fluctuating resource revenue especially hard to understand,” the analysts say.