There are indications that the economy in general is starting to pick up, but if you work in state government, don't expect the IT budget to rebound any time soon. At a gathering of the National Association of State CIOs in Washington, D.C. May 5, IT leaders from around the country had a chance to compare notes and hear about what's on the horizon at the legislative and executive levels.  

Most states are still deliberating over their budgets, and the outlook is somewhat grim. When asked about the anticipated spending levels, 58 percent of the IT leaders gathered at the NASCIO conference said they expect their IT budget to be cut.   

Even though states appear to be slowly recovering from a period of huge declines in revenue, expenses are on the rise, meaning that budgets are expected to grow slowly, according to Scott Pattison, executive director of the National Association of State Budget Officers. Healthcare costs are rising, and a stream of heavy federal funds to the states is drying up.  

"The spending side is really the problem now," Pattison told the NASCIO conference-goers. After two years in a row of declines in state budgets, there is growth, but it is modest. "The bills states have to pay are coming in higher," he said. 

For state agencies, benefits will continue to be cut, and vacant positions will continue to be left vacant, Pattison warned. CIOs need to craft their budget requests very carefully, and pair them with new ideas for cutting costs. "You have got to come in now and de-fund the losers," he said. "The days are over of just different agencies coming in and holding their hand out and saying, I need more money."

The best approach, Pattison suggested, is to view the ongoing fiscal pain as an opportunity. IT can be promoted as a means of achieving greater efficiency and lowering costs throughout government. 

Two of the highest spending areas at the state level are education and healthcare, and NASCIO members were advised that these expenses are ripe for reform. "Both education and healthcare use decades-old technology," Dan Crippen, executive director of the National Governors Association, told the crowd. "We have the same delivery technology that hasn't changed in decades. We need a new way to think about these programs and their delivery."

With Republicans having won more seats in state legislatures in the last election than they've held in decades, the emphasis is on smaller government, noted Bill Pound, executive director of the National Conference of State Legislatures. "I think there is a real search out there for efficiency in government, and IT is part of that," Pound said. "I think there is a great potential and interest in legislatures, particularly in healthcare, about what can be done in IT."

While all indications suggest that CIOs will continue to be asked to do more with less in the next year, there was a sign of hope for IT's place in government agencies. When CIOs at the NASCIO conference were asked to describe their relationship with state finance chiefs, only 15 percent said the CFO cares only about the bottom line. A healthy 38 percent said that the relationship between the finance and IT chiefs is collaborative.

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