Cuyahoga County expects the Medical Mart fund to be at about $80 million by the end of this year. That’s a few million dollars less than expected because sale tax revenue has been down. However, that doesn’t include investment earnings that add to the fund.
The interest rate presently earned on County money is 2.97 percent, slightly down from 3.17 percent, according to investment officer Terry Maltarich of the County Treasurer’s office.
Over two years the interest earnings are expected to be $1.2 million this year, some $2.4 million over the first two years of the tax. The tax was voted by Commissioners Tim Hagan and Jimmy Dimora. Collections began in January, 2008.
County Administrator Jim McCafferty told City Council last week that revenue expected via the extra quarter percent sales tax was lower than expected. He didn’t mention that the County had invested those receipts or any resulting earned income.
Even at $40 million a year the 20-year tax should raise $800 million dollars, a hefty sum, primarily to be paid to MMPI, the Chicago firm hired by Commissioners to build and operate the Med Mart and Convention Center.
However, the sales tax is likely to produce far more than $800 million unless we never have an economic recovery.
The economic recession can be blamed for the lower than expected sales tax revenue. Lower inflation also hurts revenue derived from sales.
Over the 20-year period we are likely to have better economic times and price inflation. Both will result in higher sales tax revenue. That will likely kick the revenue on the quarter percent sale tax increase for the Med Mart above $40 million a year. Indeed, the first year’s collection totaled $42.1 million.
In addition, funds collected during this early period before construction costs kick in are being invested by County Treasurer Jim Rokakis.
So the Medical Mart fund is being enriched at some $1.2 million more than the actual collections this year, a year of slow sales tax collections. Interest rates are lower also.
We can expect higher revenue from the sales tax in coming years and more interest income until major costs of construction kick in.
MMPI has an enticing pot of gold to mine at a time when financing is difficult to obtain. This combination makes it hard to believe MMPI will leave Cleveland.
Something else is going on with MMPI’s recalcitrant attitude about negotiating a purchase of the corner properties where the Med Mart was originally scheduled to be built.
MMPI seems to be holding out for something it never should have – a building location on Mall C property overlooking Lake Erie for its Medical Mart.
MMPI should not be allowed to build on government land, particularly not on land long ago preserved for public buildings ONLY.