States stagger under the weight of budget gaps

Sources of revenue for state governments are steadily declining across-the-board and states are facing the most dire economic straits they have encountered in decades, according to state government experts.

The budget shortfall presents an opportunity for information technology contractors to sell innovative concepts and approaches to states that will generate revenue and drive efficiencies that result in substantial savings, they also said.

“You should think about creative things to propose that states might not have been interested in when there was plenty of money around,” Scott Pattison, executive director of the National Association of State Budget Officers, told an industry audience on Feb. 4

Pattison was one of four panelists who spoke on state politics and economics at the Governing Outlook in the States and Localities conference in Washington. He cited outsourcing and public-private partnerships as examples of IT initiatives that have substantial appeal to states in tough economic times.

Of the 34 states projecting budget gaps at this time for fiscal 2010, 24 have budget gaps exceeding 10 percent, said Corina Eckl, director of fiscal programs for the National Conference of State Legislatures. “These are amazing gaps,” she said.

The cumulative fiscal 2009 budget gap stands at $47.4 billion as reported by NCSL on Feb. 3 in an update on state budget gaps. This is in addition to the $40.3 billion gap already closed for fiscal 2008. The 2010 state budget imbalance is projected to be $84.3 billion.

“Right now it is almost crisis management,” Pattison said, referring to the situation facing the nation’s governors and their staffs.

The federal government’s proposed economic stimulus package would provide more than $300 billion in aid to states, William Pound, NCSL’s executive director and a member of the panel, said in a statement accompanying the Feb. 3 update. Among the areas that will receive substantial funding are health care IT and transportation.

Ray Scheppach, executive director of the National Governors Association, said that the proposed economic stimulus package will bring about “phenomenal restructuring” in many aspects of the economy, including the fiscal relationship between the federal government and state government. The stimulus package could target more than 40 programs at the state level, he said.

“States are going to get more serious about the use of technology so that they can become more efficient in their operations,” Scheppach said.