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State not expecting big economic hit from spill

CHARLESTON, W.Va. -- Although the nine-county water crisis poses hardships for affected communities and individuals, the overall impact on the state economy and tax collections should be minimal, Deputy Revenue Secretary Mark Muchow said Wednesday.

"I expect the overall fiscal impact to be fairly modest," Muchow said. "It was a great inconvenience for a lot of people and businesses, but on the state side, economically and fiscally, it's not too big an impact."

Muchow said the water crisis did not shut down the economy in the region, but shifted spending and payroll to different locations.

"We're not spending less money, we're just spending it in different ways," he said.

He said the water company's do not use order clearly had a severe impact on restaurant, lodging, and other hospitality businesses in Charleston and other affected communities, but also proved to be a boon in neighboring cities and towns that had clean water.

Businesses in St. Albans, Barboursville, Huntington and Beckley thrived, as people in the affected counties traveled to those locations for meals, lodging, laundry, dry cleaning and other services, Muchow said.

Huntington and Barboursville also benefited from an unrelated water system issue in eastern Kentucky that left thousands without water for several days, he said.

"The impact to the local economies in the affected zones is very significant, but the impact statewide is a whole lot less, because there's a lot of shifting going on, where folks are buying at alternative locations," he said.

Muchow said he consulted with economists at West Virginia University and Marshall, who reached the same conclusion.

"They're pretty much in agreement there's a lot of shifting of economic activity," he said.

Similarly, Muchow said payroll and personal income tax collections should not be significantly affected statewide, even though many restaurants and other businesses in the affected areas were closed for days.

Lost income for idled workers in the affected areas will probably be offset by businesses in the neighboring areas that paid employees overtime and called in additional workers to handle the surge of customers.

Still to be determined, he said, is whether the crisis will have a long-term effect on convention and tourism business in the Charleston area, if travelers and conventions opt for other locations over concerns about health and environmental issues.

Historically, tourism destinations may see downturns after disasters, either natural or manmade, but the impact is usually short-lived, he said.

"I would think the tourism business in New Orleans is in pretty good shape these days," he said, noting tourism there rebounded after the city was devastated by flooding following Hurricane Katrina in 2005. 

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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