Enterprise Center gets infusion of cash after loss of state money

The Johnson County Enterprise Center will continue to exist this year, now that county commissioners have agreed to pump some emergency money into it to make up for the loss of state funding.

George Hansen, chief executive officer of the center, had told the commission last week that he would be forced to begin an “orderly dissolution” of the center if additional funding was not approved. The Enterprise Center provides help for entrepreneurs and small business start-ups.

He asked for $250,000 additional from county general fund reserves as well as a waiver of the matching requirement for a $150,000 county grant. The additional funds would be on top of the $332,000 the county already budgeted, bringing the county’s total commitment for 2014 to $732,000.

He said the cash infusion was necessary to offset the fact that the Kansas Legislature did not include money for the center in this year’s budget.

Commissioners voted 5-2 to grant the center’s request, but not without an extended discussion and some caveats about next year.

Commissioners John Toplikar and Michael Ashcraft voted against the measure.

“There is something wrong when it appears we are bailing out an economic program,” Toplikar said, adding that a bailout now might have an impact on the 2015 budget, which is being written now.

“Whatever decision we make right now will rack up bills for the next year or two,” Toplikar said.

Later, he said the vote to provide funding may mean a property tax increase.

Toplikar proposed a delay while the commission seeks more information, noting the commission recently delayed a request for more funds in the sheriff’s department. His motion was narrowly defeated, 4-3.

Commissioner Steve Klika said he was also conflicted about extra funding for the Enterprise Center.

“My initial reaction was not to support it,” he said, because of recent requests for extra funding from the sheriff and mental health department.

“We’ve had to deal with a number of issues that are part of our core operations and we can’t even sustain what we have,” Klika said.

He said the county’s economic development efforts are “fragmented” and the county might be better served by reorganizing economic operations like County Economic Research Institute, the Automated Information Mapping System and the center under one umbrella.

Klika voted for the funding, but warned that was no guarantee he would do so again as the 2015 budget comes around.

Supporters of the center said that although the job gains from small business start-ups aren’t as visible as a ribbon cutting at a new factory, they are still substantial.

“I enthusiastically and unequivocally support this,” said Commissioner Ed Peterson. The Legislature was “very hypocritical in giving lip service to job creation,” he said.

Business rationale for choosing a location has changed in recent years, he said.

“As a community and as a region, we have to be at the front edge of this,” Peterson said. “We can’t simply rely on tax policy.”

Chairman Ed Eilert, who also supported the funding, pointed out that the center creates new jobs rather than trying to lure away existing companies.

The Enterprise Center is a nonprofit that also seeks grants and charges fees to its users. The consulting fees tend to be below market value, Hansen said, to aid the fledgling businesses. The business incubator does not claim a share of the earnings of businesses it has helped, he said.

The center has been successful, though the successes haven’t always been visible, he said. Since 2003, the center has created 1,093 jobs directly and 2,380 indirectly, with a return of $321,000 for every thousand dollars invested, according to figures presented to the commission earlier this year.

“What we do happens slowly, it happens over time,” he said.

Hansen, who took over as CEO about a year ago, said he would continue to try to get the state to change its mind about funding. The center has already cut staff by 20 percent and will spend down some of its reserves, he said.

This story was originally published May 27, 2014 at 5:26 PM with the headline "Enterprise Center gets infusion of cash after loss of state money."