Friday, February 10, 2012

Fiscal Crisis To Cut $30 Bil In IT Spending

January 14, 2009

The ongoing U.S. economic crisis will trim $30 billion in cumulative information technology spending over the next five years, according to a recent report by consulting firm INPUT. This will come as states and localities try to come up with roughly $250 billion in new revenue and spending cuts to align budgets to the levels that preceded the multi-year real estate boom that ended in 2007. INPUT estimates the compound annual growth rate for the state and local IT market has slid to 4.3 percent from the 6.4 percent.

"We've seen so many projects held back in this quarter that we wanted to provide some concrete estimates for companies looking at 2009," INPUT's Chris Dixon said in a press release. "State and local revenue projections from last spring just haven't held up." Dixon said the market needs federal fiscal relief for state Medicaid and unemployment funds; then it needs the credit markets to loosen so states and localities can sell bonds to fund capital projects, including major IT systems.

Thirty-seven states and the District of Columbia are facing a collective mid-fiscal-year shortfall of $31.2 billion, INPUT said. However, the 10 states with individual deficits of about $1 billion or more will likely account for $22.5 billion (72 percent) of that total. California alone will likely account for more than a quarter of the national total, the firm stated. An August/September survey of 154 city and county IT officials conducted by the Public Technology Institute and INPUT found that 13.7 percent of respondents expect their overall IT budget to increase over the next two years.

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Juliana Gruenwald

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Juliana Gruenwald has been covering tech and telecom issues for more than a decade for National Journal, Interactive Week, BNA and Congressional Quarterly. This is her second stint with National Journal. She was recruited by NJ in 1998 to help launch its first tech policy publication, Technology Daily. She left in 2000 to cover international tech and telecom issues for Ziff Davis Media's Interactive Week magazine. She started her career at United Press International as the wire service's first Helen Thomas Intern. She has a Bachelor of Arts degree from the University of Minnesota. A Minneapolis native, she misses the lakes but not the cold.


Josh Smith

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Josh Smith covers technology policy as a staff reporter for National Journal. He previously interned at National Journal Daily, a Senate press office, and the Deseret News in Salt Lake City where he covered the state legislature, courts, and crime. In 2009 he graduated with honors from Southern Utah University after managing an award-winning student newspaper as editor-in-chief. Josh has received state, regional and national awards for his political and policy reporting, including first place in CapitolBeat’s 2009 Best of Statehouse Reporting college competition. A native of drop-dead-gorgeous Utah, Josh lives in Virginia with his wife, Amber.