By Kent Oyler
Unless you’ve been living under a rock, you’re probably aware that Kentucky is facing a budget crisis, the likes of which we haven’t seen in generations.
The Greater Louisville business community is acutely aware of this. We are feeling the pains that come with cuts to education funding; we’re frustrated with the lack of resources for improving infrastructure; and we worry that our law enforcement officials won’t have the resources they need to keep our streets safe.
But we get it: this is a time for tough choices and every dollar — every penny — merits scrutiny.
With that in mind, let’s make sure we’re not shooting ourselves in the foot by cutting off funds to programs that demonstrably drive economic growth and, in turn, generate tax revenues. That’s exactly what we would be doing if lawmakers in the General Assembly move forward with a proposal to cut state funding to the Kentucky Small Business Development Center (KSBDC).
The Kentucky Small Business Development Center offers vital services to entrepreneurs and small business owners, ranging from one-on-one management consultations and training workshops to market research and financial projections. With about 40 employees, they operate a dozen centers throughout the state — including one here in Louisville — and have been around for more than 35 years.
Each year, the state allots about $600,000 to KSBDC. The rest of its annual $3.4 million budget comes from grants and the federal government: about $1.6 million. The Executive Branch spending plan proposed last month, however, zeroed out the state’s portion of the KSBDC budget, which, in turn, effectively zeroes out the federal portion as well since those are matching funds. More than half KSBDC’s budget would disappear, calling into question the center’s future.
If the General Assembly was to follow through with this proposal, it would be casting aside a powerful economic development tool and vital part of Kentucky’s small business community.
In just last year alone, KSBDC had a hand in starting 140 businesses and creating close to 2,000 new jobs. The Louisville branch by itself was responsible for 29 of those businesses and 113 of those jobs. Clients counseled by KSBDC obtained an estimated $83 million in financing. Further demonstrating KSBDC’s value, an external study from 2016 showed that their clients see stronger sales and employment numbers than average Kentucky businesses.
This data alone should give lawmakers pause, but here’s the real kicker: the economic activity that can be traced back to KSBDC generates more than $5 million in state tax revenues, according to an internal audit.
So, $600,000 for $5 million? Not a bad ROI.
Thankfully, the Kentucky House of Representatives included KSBDC funding in their budget proposal last week, but the program’s funding is not out of the woods.
To the remaining lawmakers crafting the budget in Frankfort, we understand and appreciate the difficult decisions weighing on your minds right now. No one in the commonwealth envies your position. But fully funding Kentucky’s Small Business Development Center is a no-brainer. Let’s make sure KSBDC gets the resources it needs to continue driving economic growth and contributing to our small business community.
Kent Oyler is president and chief executive of Greater Louisville Inc.