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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