CMU Checkoff Myth-Busting

The concrete masonry checkoff is a tax on every CMU you sell.

FACT: The checkoff is not a tax, it’s an investment by the industry that will bring back market share. The checkoff is mandatory by design. Checkoff-funded programs are designed to benefit the masonry industry and in turn, every producer contributes at an equal rate.

My state/region is only guaranteed up to 50% of collections in my state/region.

FACT: One hundred percent of checkoff investments, after expenses, go toward advancing our industry and benefitting all producers. Fifty percent is the minimum a state/region can receive. It is not the limit. The Checkoff board, made up of manufacturers from every region, will allocate dollars to programs based on the defined need and value back to producers.

The board could increase the checkoff assessment from one cent to 5 cents in just five years.

FACT: That is correct, but highly unlikely. Any increase or decreases to the assessment rate will require a 2/3 vote of the board, made up entirely by manufacturers from every region and representing all sizes of producers. Checkoff leaders wanted to include the option of increasing assessments in the future and to provide us producers with the authority to make that decision without additional congressional authorization.

The checkoff could expand to other concrete masonry product categories including pavers, retaining walls and stone without your consent.

FACT: That is incorrect. The Order the industry is voting on only provides for assessments on concrete masonry units and only concrete masonry unit manufacturers are eligible to vote. While the authorizing legislation does provide for possible future expansion, such expansion would require a petition from the industry to do so, then another Congressional order, and then another referendum. None of that is being proposed now and it would be illegal to assess hardscape product manufacturers without them having a voice and a vote in a referendum.

The best approach for growing our industry is through voluntary initiatives.

FACT: Full industry participation in a voluntary program would be a great thing. But that is unlikely – especially on a national level. And not all states and regions are set up to support an effective, voluntary regional program. It also begs the question—how much different would this be than how we are already operating?

The checkoff program does not cover the cost of code enforcement or lobbying.

FACT: This is incorrect. Checkoffs can support the education of elected officials on relevant issues and can invest resource to support research and message development that could inform decisions made by these officials. Checkoffs do have some limitations in this area, similar to some non-profit associations. For example, checkoffs are prohibited from lobbying elected officials.

Reimbursements to the Department of Commerce are open ended.

FACT: Reimbursements to the Department of Commerce are not open ended and are limited to the cost of overseeing checkoff compliance. Looking at the reimbursements of other checkoffs, that amount for the CMU Checkoff will likely be around an annual cost of $200,000. In addition, once the Checkoff is established, there is a ten percent cap on admin costs.

A checkoff won’t help my company.

FACT: The checkoff can help shorten the sales cycle by promoting “why block masonry” over other materials. You can place more focus on selling your product. Checkoffs benefit both large and small producers. With some checkoffs, smaller producers have access to resources they couldn’t afford on their own.

My checkoff dollars are going to be sitting in an escrow account for years doing nothing. That’s money I could use now.

The limit the amount of spending that the checkoff can do in the first ten years was a requirement of the authorizing legislation by Congress. Why? Because the amount of federal taxes that you pay likely will be reduced by a percentage of your assessments. At the same time, efforts are underway to try to gain access to this escrow account sooner. But it’s important to know that these funds can be invested during that time and are retained by the Checkoff to support future industry promotion.