Report: Growing budget shortfalls among states
As states struggle to maintain existing technology infrastructure, analysts and industry experts say budget shortfalls will result in fewer new technology initiatives.<br>
This year's state budget shortfalls will result in fewer new technology initiatives as the states struggle to maintain existing technology infrastructure in an ever-widening budget gap, according to analysts and industry experts.
Two-thirds of the states are reporting declining revenue and more than half face expenditures that are exceeding levels projected in their fiscal 2003 budgets, according to the "State Budget Update," released Nov. 22 by the National Conference of State Legislatures of Denver.
States have at least a collective $17.5 billion budget gap to fill before fiscal 2003 ends, which for most states is June 30. The gap accounts for roughly 3.6 percent of the original fiscal 2003 appropriations. The total could rise as states gather additional information on revenue collections in the coming months.
"Because most states require a balanced budget each year, these gaps must be resolved by the time state officials close their books," said Bill Pound, NCSL's executive director. "2003 certainly will be a year of tough policy decisions."
Tom Davies, senior vice president at Current Analysis Inc., Sterling, Va., said that the budget shortfalls will cause the states to cut back on information technology spending as they focus on cost savings in the next six to 12 months.
John Kost, vice president of worldwide public-sector research for Gartner Inc., Stamford, Conn., said he expects states to continue allocating funds for existing projects, but that shortfalls likely will result in a slowdown in new IT initiatives.
To create new opportunities at the state government level, integrators will need to offer solutions that enable governors to propose structural changes in how the state does business, he said.
"IT solutions can make delivery of services more cost-effective. Some states may make investments in new approaches, if the vendors can truly prove they have a viable solution," he said.
The State Budget Update reported: