RESTON, Va., 23 May 2008. Due to depressed sales taxes as a result of declining housing prices, fiscal year (FY) 2009 will be the toughest year for state and local government information technology (IT) spending over the next five years, according to Input.
2009 will be the year when most IT departments will suffer from government-wide budget cuts and reduced fees from service to client agencies. (For most states and localities, FY 2009 runs from July 1, 2008 through June 30, 2009.) This and other insights on the state and local government IT market will be delivered at INPUT's 3rd Annual State & Local MarketView event on June 4, 2008 at the Westin Tysons Corner.
"The worst of the budget cuts will be passing through in the coming fiscal year," says Chris Dixon, manager, state and local industry analysis for Input. "Even states without major deficits, like North Carolina, for example, are making necessary adjustments now to fend off a full-blown crisis. IT departments will have to share some of the pain next year, if only for symbolic reasons. However, at the end of the day, budgets cannot be balanced on the back of IT."
Input remains optimistic about the prospects for healthy IT throughout the period. Justice/Public Safety and Homeland Security will remain active in response to the rising costs of prison systems and the ongoing effort to establish interoperable communications systems.
"We still have a number of drivers within this market that are virtually recession proof," says Schalene Dagutis, vice president, state and local information services for Input. "This is a good time for determined vendors to weather the storm and outlast some of their fair-weather competitors. Government IT leaders will remember who was there for them in tough times. Vendors simply need to have a two-tiered business-development strategy with appropriate approaches and timelines for customers in good and bad financial circumstances. Vendors with a one-size-fits-all approach will struggle to gain traction."
