Steve Rose — Vital economic tool shows success, but faces fund cuts
01/07/2014 4:48 PM
01/07/2014 4:48 PM
“You won’t find anything better than this, when it comes to a documented return on taxpayer investment.”
Johnson County Chairman Ed Eilert’s adulation refers to the Enterprise Center of Johnson County, located in Lenexa. It is an incubator for entrepreneurs with often good ideas — sometimes great ideas — but who need a “filter” to sort out the winners from the duds.
It’s a well-kept secret, but the center is one of the great success stories in Johnson County.
Rhythm Engineering in Lenexa is but one of many success stories. Founded in 2005 on a shoestring, it has, since its launch, paid out over $8.5 million in payroll. It grew from one employee in 2005 to 47 in 2012.
Innovadex, a search engine for chemists, was launched in 2000 with one employee. Their headquarters remains in Overland Park, but the company now also has offices in Germany and China. There are now 75 employees, and the Overland Park office will be adding about 25 new employees in 2014. Said its CEO: “ECJC gets great ideas and great people and puts them together.”
Without any ribbon cuttings or fanfare, the ECJC over the past decade has nurtured 65 companies, who have paid a total of $324 million in wages and created 2,400 jobs. The overall economic impact has been estimated at over a billion dollars.
That’s not a bad outcome for the small amount of tax dollars the county puts in: $300,000 annually.
Not a dime of that goes into the actual “seed money” for these start-up companies.
Rather, the entrepreneurs with their ideas come to the center with perhaps $10,000 to $25,000 of their own money, often raised from family and friends.
The Enterprise Center provides the space, secretarial help, training, and mentoring — the “infrastructure” for a start-up business.
Then, if the new concept has legs, private money is raised, often hundreds of thousands of dollars from “angels,” who embrace the idea with their investment.
This is a proven winner in public/private partnerships.
Here’s the kicker.
Despite the Enterprise Center’s enormous success as a job builder, the Kansas Department of Commerce — which boasts that the highest priority of state government is job growth — cut all of its funding for the Enterprise Center last year, a result of a statewide budget squeeze.
That loss of $350,000 in funding has put the entire program at risk. Even with sharp cutbacks in staffing, the center cannot function with what amounts to a loss of about half its annual operating budget, not counting the fixed rent cost of $250,000 a year.
At a time when Kansas and Missouri are showering hundreds of millions of dollars in tax incentives on businesses that move back and forth across the state line, creating few net jobs, relatively tiny amounts of tax dollars are creating home-grown businesses that are bringing in jobs and contributing monumentally to the overall local economy.
The center has about a year’s reserves to cover the shortfall. After that, it will be in a perilous position.
It desperately needs either an about-face by state government, which should be a meaningful contributor to this vital program, or Johnson County commissioners will have to search through their budget and come up with the necessary funds to keep this program going.
However and whoever steps up to the plate, we must make sure that this economic development machine keeps on turning out new businesses.