DALLAS -- Texas should continue to outpace the national economy as strong population growth makes it the second most populous state by the end of the decade, state economists say.

"The good news is that we will outperform the national economy," said Tom Plaut, chief economist for the Texas Comptroller's office. "The bad news is that our growth won't be anything like what Texas experienced in the 1970s and the early 1980s."

Mr. Plaut's office recently completed the state's first-ever 20-year economic forecast, and it is predicting Texas will experience annual growth of about 3%, compared with a national average of about 2.5%, through 2011.

At the same time, it predicts the state's population will grow by 2 million, to 19.2 million residents, by the year 2000.

Such projections may help the state in its quest to upgrade its double-A rating. Tom Pollard, executive director of the Texas Bond Review Board, said, "When you are talking about picking up economically, it's got to be good news."

While other Texas economists agree with the projections, none could say how much state and local governments will have to spend on infrastructure to meet the demands of that growth.

While such costs are likely to be several billion dollars, Mr. Plaut said, "With the economic growth will come the ability to pay for those investments."

A primary reason Texas expects to continue to be a magnet for corporations and a migrating work force is the low cost of living and doing business here. This low cost was brought on, in part, by the oil, real estate, and banking crashes of the last decade.

"We're still in a transition period, and 1992 will see that continue," said Ray Perryman, economist-in-residence at Baylor University in Waco, Tex.

Part of that transition, he noted, is the permanent shift of the state's economy from its reliance on the oil and gas industry, which was hit twice by global energy recessions in the 1980s.

During the boom years, Texas had about 1,400 oil rigs in operation, but it recently has averaged about 250. The energy sector, which once accounted for 30% of the state's gross national product, today accounts for about half that.

"There was a time when you could graph the rig count and the economy, and the two lines were almost laid over one another," Mr. Perryman said. "Ten years ago, we were dependent on the price of oil and little else. But it will never again be as good as it was."

As the transition continues, economists say this year could mark the end of a five-year slide in property values statewide.

Total market values of all taxable property in Texas peaked at $829.8 billion in 1985 and then fell to $738.7 billion in 1990, the last year for which figures are available. According to the state's Property Tax Board, the annual rate of decline slowed from a high of 4% in 1987, to 0.06% last year.

Many government officials blame the continued decline on the Resolution Trust Corp., which is overseeing the federal bailout of the savings and loan industry.

The government has been criticized for selling its land holdings in large blocks at deep discounts -- a practice said to depress market value.

Mr. Perryman, however, said the best thing for Texas would be if the government sold its properties in the state as quickly as possible.

"The quicker it is resolved, the better," he said. "Delays are causing a lot of potential investors to sit back and wait to see what the federal government is going to do."

Still, Mr. Plaut believes cheap land and office space, a young work force, and other factors will continue to lure major employers to Texas -- a migration that peaked in the mid-1980s.

"We have so much excess capacity here that is going to take a long time to use the excess space that we have," he said. "Even 20 years from now, we should still be a cheaper place than, say, northern California."

Besides making their first longterm projections for Texas, state economists have developed the first regional forecasts for the six major metropolitan areas. So far, the outlook is good.

Mr. Plaut said Houston will continue to lead the state in the number of new jobs, but El Paso is expected to have the best overall growth rate.

The economists also say San Antonio will continue to grow steadily with the expansion of its tourism-based economy.

Dallas and Fort Worth may be hurt by continuing layoffs in the aerospace and defense industry and the closing of Carswell Air Force Base. Growth also is expected to be sluggish in West Texas, which relies heavily on the oil and gas business.

"Texas has several big important regions in the state that respond to different factors," said Bill Gilmer, a senior economist with the Federal Reserve Bank of Dallas. "There is no reason to believe that will change over time."

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