States keep IT programs on track

Input: Assessing the Impact of State Budget Shortfalls on IT Vendors

Rather than make across-the-board spending cuts in programs, state governments

are using alternative measures, such as dipping into "rainy day" funds and

raising taxes, to grapple with a collective $22 billion revenue shortfall.

As a consequence, many state capital investments and information technology

programs have not been impacted as greatly as expected, according to Input,

a Chantilly, Va.-based marketing and research firm that recently surveyed

officials in 50 states.

"In terms of information technology, we're not seeing major cuts being

made," said Suzy Haleen, a state and local analyst for the firm. "In my

opinion, the governors are aware that if they make a bunch of cuts now,

several years down the road, they'll not be able to keep up." But she added

that the situation is different in each state.

The Input survey found that, for fiscal 2002, only 10 states reported

no shortfall and the total shortfall across all states was about $22 billion.

But Haleen said several states have balanced-budget requirements and are

in the middle of a biennial budget cycle, so determining a collective number

is difficult.

However, in July, the National Conference of State Legislatures said

that 43 states reported budget gaps totaling about $36 billion. For fiscal

2003, NCSL projects the collective budget shortfall will grow to nearly

$58 billion. For 2002, the group said 26 states implemented targeted or

across-the-board cuts, and 19 states drew from their rainy day funds. States

also raised taxes by $6.7 billion, NCSL said.

In addition to these alternative measures, states also reduced aid to

local governments and laid off employees, the Input survey found. Haleen

said that while all states reduced spending across the board, it was not

the primary way to reduce their gaps, but more of a last resort. Many used

reserve funds and increased taxes.

Haleen said that IT vendors have to find ways to make their products

more attractive to government officials by knowing and understanding and

agency's needs and requirements and the state government's fiscal condition.