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Moody’s: Oil collapse leads to budget shortfalls in U.S. oil states

NEW YORK -- Lower tax revenues because of job losses in energy and related sectors due to the collapse in oil prices will hit budgets of oil-producing states through the remainder of this fiscal year and next, Moody's Investors Service said on Mo...

NEW YORK -- Lower tax revenues because of job losses in energy and related sectors due to the collapse in oil prices will hit budgets of oil-producing states through the remainder of this fiscal year and next, Moody's Investors Service said on Monday.

Moody's comments came after Oklahoma revised its revenue projections down last Tuesday for the remainder of the current fiscal year by $444 million, or 8 percent of the total, and by 13 percent for the next fiscal year, which starts July 1.

The price of U.S. crude has fallen to its lowest level in seven years at just over $34 per barrel. The price has fallen nearly 70 percent over the last 18 months.

The analysts expect to see a similar dynamic in Alaska, Louisiana, New Mexico, North Dakota and Texas, with those states having to dip into budget reserves to meet shortfalls.

New Mexico, North Dakota and Texas are more insulated than Alaska and Louisiana from the fall in oil prices because their economies are more diversified and they have substantial reserves, Moody's noted.

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