Public-Sector Tech Braces for Even Tighter Budgets

“All states are facing lower than projected revenues, which is putting significant downward pressure on state IT budgets,” with the severity varying by state, said Denis Goulet, New Hampshire information technology commissioner and chief information officer.

Mr. Goulet, who is also president of the National Association of State CIOs, said the looming budget crunch follows months of large, unplanned investments in laptops, software, remote-access infrastructure, call-center expansions and other resources to support states’ Covid-19 response. The Lexington, Ky.-based group represents CIOs and IT leaders in U.S. states, territories and the District of Columbia.

Between March and September, state revenues from income, sales and corporate taxes were down 4.8% from the same period a year earlier, according to data compiled by the Urban Institute.

Across the board, the shortfall in U.S. state budgets from 2020 through 2022 could amount to about $434 billion, according to Moody’s Analytics, the economic analysis arm of Moody’s Corp.

During the pandemic, state agencies have sought tech support to manage sharp increases in unemployment benefits claims, Covid-19 contact tracing and personal protective equipment inventories, among other things.

The U.S. has reported more than 16.6 million Covid-19 cases and more than 302,000 deaths from the disease, according to Johns Hopkins University.

Online services, such as driver’s license renewals or accessing public-health information, jumped two places this year to rank second in the annual listing of state IT priorities compiled by NASCIO. Broadband access climbed to the fourth spot, its highest ever ranking, driven by increased demands to support remote work, home schooling and other issues sparked by lockdowns and travel restrictions.

Cybersecurity topped the list for the ninth year in a row, the group said. The rankings are determined by member votes.

Throughout the year, many public-sector IT leaders were forced to balance ongoing efforts to update aging systems with emergency needs.

Recent shifts to cloud computing helped carry the added load without overwhelming available capabilities, while enabling agencies to rapidly deploy communications and collaboration software and other applications.

“Public-sector agencies will have to continue the migration to the cloud to accommodate their work-from-home staff,” said Daniel Castro, vice president of the Information Technology and Innovation Foundation, a Washington-based tech policy think tank.

Mr. Castro said a breach earlier this year of computer systems at multiple federal agencies, disclosed this week, will likely focus greater attention on state IT security efforts.

The attacks, which included the U.S. Treasury and Commerce departments, are believed to be part of a global cyber-espionage campaign targeting key public-sector agencies.

While cyberattacks typically exploit security weaknesses or poorly guarded systems, he said, “organizations with good security practices still fell victim.” Mr. Castro said the attack could prompt some public IT security leaders to adopt strategies such as a zero-trust model, which involves narrowing cybersecurity efforts to the level of individual applications, rather than an entire network—a safer, but costly shift.

New Hampshire’s Mr. Goulet said security breaches and ransomware attacks hamper the ability for state and local governments to provide essential services, including pandemic-relief efforts.

“Almost every day we’re reminded that we must remain ever vigilant,” he said. “No one is immune.”

Write to Angus Loten at [email protected]