Give it a good basic tuneup with new plugs, wires, cap and rotor (if it uses them), air filter. Clean/test/replace the EGR valve and inspect the vacuum tubing that goes to it. A couple of cans of Techron cleaner run through the fuel system couldn’t hurt too. If you can find a shop that has an older scan tool that will ‘read’ OBD1, you should be able to tell if the oxygen sensor(s) are totally dead, lazy, or working normally before replacement. If they’re dead, replace and retest for smog. A generic sensor would probably be fine if you need one, but don’t quote me on that.
You can get all of this done cheaper somewhere besides the dealer. Retest and see what you get.