Uncertainty for Statewide Innovation and Entrepreneurship Infrastructure
Governor’s Office “Withholds” Entire FY2020 Missouri Technology Corporation Budget Allocation
The Missouri Technology Corporation’s ENTIRE $2.91M FY2020 appropriation was included among Governor Parson’s $180M spending restrictions to address the budget shortfall as a result of COVID-19. This includes amounts already disbursed by MTC.
We have never seen or experienced the state going back retroactively to sweep funds already expended. This is concerning and a very dangerous precedent for all publicly funded entities. Historically, when MTC has been included in budget withholds by the Governor, such restrictions were forward-looking on General Revenue transfers only.
By forcing MTC to surrender their entire FY20 budget allocation and an anticipated deep FY21 budget cut looming, it has created a situation where MTC has been unfairly expected to rely too much on cash reserves for the past four years. This is not a sustainable model for MTC and by extension the state's entrepreneurial ecosystem.
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WHAT THIS MEANS
Innovation centers, entrepreneurial support organizations, inventors and startups are critical to our state’s economy and what will be our new normal. Defunding the state’s entrepreneurial and innovation support infrastructure is crippling and sends a clear message that Missouri is NOT open for business. It’s even more troubling when we’ve seen startups and innovation centers on the front lines to help supply PPE and fight in the COVID-19 response. Startups, small business and innovation will be what is NEXT for Missouri.
The FY2020 entire allocation withhold to MTC puts already approved projects in jeopardy. Most at risk are the state's nine Innovation Centers - many are located in rural areas and in most cases are the only resource for entrepreneurs in those regions. Also at risk is much-needed capital for entrepreneurial support organizations throughout the state, many of which rely on coworking or event-oriented sources of revenue that for the near term are no longer viable options. These organizations support technology-focused entrepreneurs throughout the state, which are not typically eligible for SBA Emergency Loans; therefore, the MTC is their only resource.
If MTC has to forfeit the entire FY20 budget allocation, it would severely affect their ability to increase the amount of capital dedicated to MOBEC grants next year - when they would be needed the most, and could even create a situation where the program is cut from the FY21 budget. Since the Governor's Office cut MTC's funding from over $17M and $13M in FY's 2016 and 2017 to below $3M, MTC has been leveraging its cash reserves to maintain a consistent level of funding for the statewide ecosystem for FY's 2018, 2019, and 2020. The Governor's Office suggested an even larger budget cut to MTC for FY21- $1M down from $3M.