Because of higher interest rates, high gas prices and increasing inflation, some economists are predicting a recession in the U.S. economy in the near future.
Any kind of economic downturn could affect the amount of tax revenue coming into a state, which could put state governments in a tough situation.
Friday on WVNN’s “The Dale Jackson Show,” State Sen. Arthur Orr (R-Decatur) said Alabama’s state budgets were still in “excellent shape” but warned that no one knew how long a recession could last.
“Right now … we’re in excellent shape,” said Orr, “both the general fund and the education budget, but how bad will this predicted recession hit us? We’re certainly ready for a storm, but to the extent and length of it, no one knows how bad it will be. But we’re certainly ready for this storm ahead.”
The state senator warned that the budgets could handle a downturn for “a usual predictable period of time” but not forever.
“[I]f it goes on for years and years,” he continued, “where we have stagflation and economy in the brink, in the drink, just struggling for years, we too will struggle because the revenues will fall and the costs will certainly increase.”
Orr advised that there was still some good news in the economy, especially in Alabama, but that it could change quickly.
“The jobs report just came out this morning,” he explained, “employment is level, lots of new jobs created. So, does that mean inflation continues on? There’s just a lot to be determined in the months ahead, but we are ready for a storm for sure.”
Alabama is also slated to receive another $1.1 billion from the America Recuse Plan Act (ARPA), which could mean the legislature would have a special session to determine how to spend the federal dollars, although Orr said that was not likely.
“I think it gets punted until after a new legislature is impaneled after the election,” he said. “I don’t see it happening before then. It certainly could change, but I think it gets pushed out probably sometime in January of next year, if I had to guess.”
He argued that lawmakers needed to be smart and strategic in spending the ARPA funds.
“A lot of what we’re waiting on is still the federal guidance with the ARPA funds,” he lamented, “and what we need to be careful of in Alabama is this is one time money, so local governments, schools, etc. do not need to bake this into their annual operating budget and then look to the states for continuing revenue to continue to fund those operations that they funded with one time money.”
Yaffee is a contributing writer to Yellowhammer News and hosts “The Yaffee Program” Weekdays 9-11am on WVNN. You can follow him on Twitter @Yaffee
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