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Spokane, Washington  Est. May 19, 1883

Innovate Washington loses state funding

Agency manages two buildings in Spokane, has reserves

Kim Zentz, CEO of Innovate Washington, looks out at the Spokane skyline Tuesday at the Spokane Technology Center. (Tyler Tjomsland)

State legislators have eliminated funding for Innovate Washington, an agency created just two years ago by the merger of Sirti and the Washington Technology Center and charged by the Legislature with “growing the state’s innovation economy.”

Innovate Washington CEO Kim Zentz said the agency had sought $5.6 million in state funding for the next two years to support operations at existing levels.

Instead, the final, $33.6 billion state operating budget eliminated all financial support for Innovate Washington.

Budget writers from the state House and Senate haven’t explained why Innovate Washington and several other programs, including the Washington Economic Development Commission, were denied funding.

Calls to legislators who helped fashion the budget were not returned Wednesday.

In April, two months before the final budget was hammered out, Zentz said she met with Sen. John Braun, the Republican vice chairman of the Senate Ways and Means Committee, who told her Innovate Washington would likely be a budget casualty. His warning came while the Senate budget still had $1 million for Innovate Washington, Zentz said.

“He told us that until there was ‘meaningful dialogue’ on state business climate issues between the Legislature and the governor’s office, the Senate Majority Coalition saw no reason to invest in any economic development implementation,” Zentz said.

She said the issues dividing the two sides included taxes, state labor and industry practices and workers’ compensation guidelines.

Zentz said it’s too soon to define the next steps the agency will take.

Innovate Washington has roughly $2.6 million in “non-appropriated” reserves left over from the merger.

Its primary focus is on helping companies develop better products, sharpen business plans, find financing or find partners to expand sales.

The merger between Sirti and Seattle-based Washington Technology Center occurred after state leaders decided the two state-funded groups needed to work together on strategies to help tech companies expand and develop new products.

Innovate Washington settled on clean energy technology as its first focus, and Zentz, a former Avista Utilities executive, became its CEO. She had been Sirti’s executive director since 2005.

Innovate Washington has a 20-person payroll, with seven positions in the Spokane area.

Zentz said she’s discussing options with the agency’s two boards; one manages its fundraising foundation, and the other oversees the agency. The foundation exists because the agency’s charter requires Innovate Washington to seek grants from private sources, spokesman Tim Priest said.

One option is to transfer some of Innovate Washington’s programs to the state Department of Commerce.

Another option is to make Innovate Washington independent of state support, Zentz said.

“The state agency has not been eliminated,” allowing Innovate Washington to work on finding other funding and move on, she said.

Zentz added the group will continue to manage its two Spokane buildings. One is the former Sirti building, which provides leased office and lab space. The other is the Spokane Technology Center, a business incubation center that rents space to startups.

Rep. Kevin Parker, a Spokane Republican, said the House’s initial budget had $4.6 million for Innovate Washington. But in the late stages of the budget, Parker said, House members heard rumors that the agency had informed a Senate committee that it had created no more than a handful of jobs since the 2011 merger.

Parker, who sits on Innovate Washington’s board of directors, said he thinks the agency does effective work.

“But when the rumors filtered over to the House, it led to negative assumptions” that eroded support in the final budget, Parker said. True or not, the rumor affected those members already inclined not to support Innovate Washington, he said.

Zentz said she regards the rumor as bogus. She searched Senate hearing agendas and didn’t find any likely instance when that might have happened.

She said Innovate Washington has created or retained 385 jobs statewide since the merger.

She also said she was disappointed that legislators, who approved the 2011 merger, gave the group less than two years to establish a track record.

Rep. Cyrus Habib, a Bellevue Democrat who’s also an Innovate Washington director, echoed her concern.

“I feel we need to give time for this program to work,” Habib said. He said investing in education is a long-term strategy, but efforts like Innovate Washington are needed to help the state be economically competitive in the next 10 years.

“My feeling is, when we do this, we’re eating our seed corn instead of planting it.”

Sirti – originally the Spokane Intercollegiate Research and Technology Institute – was created in 1994 with the goal of matching university researchers with area companies and startups.