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Monday, March 23, 2020

Maybe Cleveland Shouldn't Give Away Millions to Sherwin Williams on the Precipice of Economic Collapse

Posted By on Mon, Mar 23, 2020 at 4:15 PM

click to enlarge MIKE MOZART/FLICKR CC
  • Mike Mozart/Flickr CC
Cleveland City Council is scheduled to vote Monday evening on an incentive packages for Sherwin Williams that has been estimated at roughly $100 million.

The bulk of that package, which is meant to subsidize construction of a new corporate headquarters downtown, is what's called a Tax Increment Financing (TIF) incentive. Sherwin Williams will be permitted to keep the non-school portion of what it would have paid in new property taxes and invest that sum in its facility.

But the package also includes a $13.5 million construction grant — free money from the city. One local think tank is urging City Council to delay its vote on the package, in part because city money could be in short supply with an economic recession on the horizon.

"As the COVID-19 crisis is forcing employers to lay off workers, the city of Cleveland will lose a large portion of its main source of revenue, the payroll tax," wrote Policy Matters Ohio's Zach Schiller, in a post Monday. "The prospect of an economic downturn makes it unwise for city council to approve the incentives at this time."

Schiller noted multiple other reasons why the incentives are imprudent under any circumstances. Among them: the stratospheric executive pay of Sherwin Williams CEO John Morikis ($14.85 million) relative to median worker income; the more than $1 billion in stock buybacks in 2018 and 2019 which suggest that the corporation is by no means hurting for cash; and the fact that corporations overwhelmingly make the same decision about office locations even without incentives of the kind Cleveland is offering.

Policy Matters called on the state of Ohio to assess its (still secret, but no doubt sizable) incentive package as well. In the same post, Schiller argued against subsidizing Sherwin Williams' plan to move its R&D employees from Cleveland and Warrensville Heights to a new facility in Brecksville

"This will subsidize an overwhelmingly white, relatively affluent community over a largely black, much poorer community. With thousands of businesses shuttered and 139,000 Ohioans applying for unemployment benefits in the first five days of last week alone, the state will soon experience a major downdraft in revenues," Schiller wrote. "In this environment, it’s especially inappropriate for the state to subsidize the move from Warrensville Heights and Cleveland to Brecksville."

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