National energy policy is focused on increasing production and exploration of existing energy sources (particularly oil and natural gas). What impact this might have on local institutions, particularly local governments who are often responsible for providing the infrastructure necessary to sustain production and exploration, is a relatively unexplored but important question. Sociological theory predicts that the effect will be most felt in nonmetropolitan communities that specialize in oil and gas production. We pursue this issue by examining the impact of the oil and gas industry boom and bust period of the 1970s and 1980s on local government finances in oil and gas intensive nonmetropolitan counties/parishes in the five states in the Gulf of Mexico region. We find that the 1977-82 boom in the oil and gas industry created more non-governmental revenue growth for local governments, and that the 1982-87 bust led to less non-governmental revenue growth for that period. We also find that in oil and gas counties/parishes revenue growth did not keep pace with expenditure growth during that period. We found similar results for expenditure growth for the boom and bust period. Mixed evidence was discovered to support the proposition that the bust cycle had long-term effects on local government revenue and expenditure growth in oil and gas counties/parishes.

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