Kansas budget woes render uncertainty for angel tax credits
May 2, 2015 | Bobby Burch
As state budgetary concerns loom in the background, early-stage firms in Kansas are hoping a bill to extend the Sunflower State’s Angel Investor Tax Credit program will become a priority for legislators.
Scheduled to sunset after the 2016 fiscal year, the program annually allocates $6 million in credits to entice investments in early-stage, growth-oriented companies in Kansas. HB 2405, which is now awaiting Kansas House approval, would extend the life of the program until 2021.
The bill’s future, however, is in limbo. Kansas faces a projected $600 million budgetary shortfall as a result of the legislature’s slashing of personal income taxes in 2012 and 2013. Legislators now are grappling with the choice to phase out what’s been a popular program, or spend some of the state’s limited dollars.
“It’s difficult right now, considering the budget situation,” said Chris Harris, Angel Investor Tax Credit program director. “But there’s cautious optimism (the bill will pass).”
Harris testifies before Kansas legislators each year, reporting on the program’s success since its 2005 launch. In its ten year life, the program has helped 298 companies raise more than $342.9 million in capital, which has allowed the firms to create 1,188 new jobs. Since 2012, the tax credits have helped create 549 jobs, according to the Kansas Department of Commerce.
The program is off to a hot start in 2015, too. Already more than 50 companies have applied for the credits by March 2015, which Harris said nearly doubles the volume of applications when compared to March 2014.
Melissa Roberts, marketing director for the Enterprise Center of Johnson County, said her organization’s angel investment arm, Mid-America Angels, seeks out the credits with each deal.Roberts said that the tax credits not only entice investors, but also mitigate the risk of backing an early-stage firm.
“The existing tax credits make Kansas companies more attractive to investors — from Kansas or any other state,” she said. “It allows angel investors to leverage their real investment in a company–and in some cases, encourages investors to tolerate a bit more risk or make a larger investment than they normally would.”
Roberts said that more than 20 states have implemented programs to attract or retain investment capital by way of income tax credits. On average, 4.1 new jobs are created for each angel investment made, according to the Center for Venture Research.
Featured Business
2015 Startups to Watch
stats here
Related Posts on Startland News
She wanted to bring her favorite foodie magazine to KC; her mother’s sudden death put this publisher’s plans on the back burner
Lauren Cook’s passion for Edible Communities magazine drove her appetite to revive it in Kansas City, she shared, but an unexpected life change has her hoping to hand the publisher’s apron to someone else. Cook purchased the license to publish the city-specific food magazine — each independently run by publishers in metros across the country…
Digital Sandbox alum earns new round of funding — this time for sports tech; Meet the latest batch of just-funded startups
From making the college admissions process easier for students to summarizing books and podcasts using artificial intelligence, the latest startups to join Digital Sandbox KC are a great example of the creativity of this region’s entrepreneurs, said Jill Meyer. The four newly selected companies are expected to receive up to $20,000 in project funding and…
Her red sauce is dynamite but Ragazza’s owner gives the chef title to her Italian heritage
Family is baked into the core of Laura Norris’ restaurants, she shared, from the Italian recipes served at Ragazza in Westport to the brother-sister duo running the new Enzo Wine Bar and Bistro together in the River Market. She opened Ragazza, which now sits at the corner of 43rd and Main streets, in 2013 and…
How a ‘City Hall Swiftie committee’ is bringing joy (and business) to NKC as concert tour hits Arrowhead
The street lights are pointing in an arrowhead, leading Taylor Swift fans to North Kansas City where they can walk the iconic “Cornelia Street.” In June, North Kansas City Mayor Bryant DeLong announced that Swift Street in NKC was to be temporarily renamed Swift Street (Taylor’s Version) in honor of the artist coming July 7-8…