State IT Budgets Still TightState IT Budgets Still Tight

While revenues continue to climb in state government, fierce competition for dollars leaves less available for IT projects, said both information and budget officers at the midyear conference of the National Association of State Chief Information Officers (NASCIO).

After significant budget cuts between 2001 and 2003, state governments are enjoying a newfound era of prosperity. Revenues in nearly all states are strong, said Scott Pattison, executive director of the National Association of State Budget Officers (NASBO). But that doesn't necessarily warrant huge optimism for the IT community.

"The problem is there are a lot of competing fiscal pressures, with not a lot of money left over for IT projects," Pattison said.

Specifically, IT competes with Medicaid, education, pensions and transportation for dollars from the same pool of funds, with the two former most often earning the political backing. In fact, health care and K-12 education were the only two areas that saw budget increases when revenues were drastically decreasing a few years ago. The trick is for industry and state CIOs to jointly demonstrate the potential benefits associated with IT initiatives, Pattison said.

That includes finding ways to save money through [strategies] like partnerships with the private sector.

"Continue to think creatively and innovate as you have, and you'll win the opportunities," Pattison said.

That will be particularly important in the next three to five years, when revenue growth comes to a halt. "What goes up, must come down," he added. "We expect revenue growth will slow in 2007 and 2008."

Interestingly, health care poses as much an opportunity as it does a challenge for winning dollars. According to a survey of those in attendance, 64 percent point to health and human services as the area of government with the most potential for improvement through better application of IT. Specifically, states want to implement electronic health records for improved services to constituents and management of data. The biggest challenge for state CIOs? Thirty percent of attendees said increasing IT efficiencies and effectiveness through the adoption of leading practices and emerging technologies.

And that's where the channel can step in, bringing forward not only products but solutions to the problems facing government, as well as a means for improving processes and reducing cost.

"In these cases of major change, there is a threshold of obsolescence that is dangerous," said Charles Rossotti, senior adviser at the Carlyle Group and former commissioner of the Internal Revenue Service, responsible for the agency's massive modernization project in the late 1990s. He is also co-founder, former chairman and CEO of American Management Systems, now a part of CGI.

"There comes a point where [an agency is] so dependent on technology and so far behind that catching up becomes not only daunting, but threatening," he said. "[The IT community doesn't] want to cry wolf, but [agencies need to] recognize when the ability to function is threatened."