Idaho Points With Pride at Economy Amid Recession : Budget surpluses: A major effort to diversify industries turns the state into financial gem of the West.

As the rest of the nation wallows in recession, Idaho shines as a financial gem in the West.

“In too much of America, it is a bleak new year with an economy stuck in neutral,” Gov. Cecil Andrus said recently. “Idaho stands in sharp contrast to this grim picture. In many ways, we are the envy of the nation.”

Through much of the 1980s, the situation was reversed. While America was recording its longest post-World War II recovery, Idaho was gripped by one of its worst economic downturns.

The population was declining. Unemployment was more than 11%. Personal income was stagnant. But as the outlook began to brighten for farmers and ranchers in 1987, the state launched a major campaign to diversify its economy.

Even as the cornerstone industries of timber and mining became more efficient and better able to compete, their economic influence was diluted by dramatic expansion in high technology, tourism and services.

“The balance of what’s important to this state has begun to shift,” giving the state’s economy a vitality that now shakes off shocks to any one industry, said Scott Hayes, executive vice president of West One Bank.

State and local economic developers worked harder to lure companies from other states, selling them on Idaho’s soaring mountains, rushing streams, low cost of living and low crime rate.

It paid off. A state with just 1 million people became a national leader in job expansion. Non-farm employment rose 20% over the last five years and high-tech employment jumped 45%. Per capita income is up 35%.

As a result, while other state governments are struggling with budget deficits, Idaho has run up budget surpluses in each of the past three years and is sitting on a $34.5-million reserve.

“The Idaho economy has recorded impressive performance in recent years,” said Jeff Thredgold, chief economist for KeyCorp. “Economic diversification successes have established a foundation for growth and stability in the 1990s. . . . The Idaho outlook remains bright.”

The dramatic expansion of the past several years is slowing. But Idaho continues to grow while other states see jobs evaporate, services reduced and taxes increased.

Since the census in April, 1990, the population has risen more than 3% in what Andrus likes to call “the last great visage of what America once was.”

The capital city, Boise, was selected as the fourth most livable city in the nation last fall by Money magazine.

“Idaho has done very well,” Idaho Power Co. economist John Church said, “and the bright economic outlook will continue to draw more people.”