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CHARLESTON, W. Va.–The anticipated increase in interest rates from the Federal Reserve will have an impact on West Virginia’s revenue.
State Deputy Revenue Secretary Mark Muchow said that he believes the much-talked-about increase to slow inflation is going to happen. Fed Chairman Jerome Powell has hinted of it for weeks.
Muchow said raising interest rates normally slows everything down.
“That will have a slowing effect on the economy which will have an impact on all of the other (state) taxes,” Muchow said.
Specifically, Muchow said the state’s revenues would notice a change in transfer fees collected in connection with real estate transactions.
“Property transfer has been very, very health recently with a lot of interest in buying homes but as mortgage rates rise, home prices rise, income will rise but not as quickly, you should see a slowdown in property tax transfers,” he said.
Muchow said on the positive side, the state’s money that’s in the bank through the office of state Treasurer Riley Moore should earn more interest income.
“You will see interest income improving as the months go on,” he said. “In fact, it could end up on the positive side this year and could be more next year.”
The state is currently enjoying what Gov. Jim Justice has continually called record revenue growth. Administration officials believe revenue collections could exceed estimates by more than $1 billion by the end of the fiscal year June 30.
Muchow said it usually takes as many as 9 months for the full impact of an interest rate hike to be realized.