CHARLESTON, W.Va. -- The state Department of Revenue is not expecting the water crisis tied to the Freedom Industries chemical spill to have a significant effect on the state's overall economy and tax collections.
Deputy Revenue Secretary Mark Muchow has been monitoring the effect the water ban has had on state businesses and workers' wages, which could in turn have an effect on state sales and income tax collections.
State revenue collections were already running more than $60 million behind for the current fiscal year, leading Gov. Earl Ray Tomblin to enact a hiring freeze and midyear budget cuts.
Muchow said that while the water crisis could have some effect on overall revenue collections and spending going forward, he did not expect them to be significant.
"I would expect higher government outlays related to the resolution of this crisis and possibly slightly lower tax receipts," he said.
However, he noted a portion of that additional government spending will likely be reimbursed by the federal government.
While businesses within the affected West Virginia American Water Co. territory were forced to shut down as part of the crisis -- resulting in lost sales and wage payments -- Muchow said much of that effect was likely offset by activity in other areas.
As a result, he is not expecting the water ban to take a significant toll on the state's economy.
"Our current estimate of the aggregate economic impact on the entire state economy should be relatively small with economic activity shifted from one geographic region to other regions and some shift of purchasing habits to the future," Muchow said.
Even within the affected area, Muchow said there were many offsetting economic effects. While consumers couldn't eat out at restaurants, they were spending money on other needed supplies.
"For example, consumers are purchasing more paper plates, plastic utensils, laundry services and easy to cook frozen foods," he said. "All of these purchases are taxable with the exception of the frozen foods."
He also said Charleston residents likely traveled out of town to get food and buy other supplies once local stores were depleted.