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Government IT Awaits Impending Budget Storm Under New Strain

Tech departments are moving quickly to meet the unique, urgent needs of the moment. Meanwhile, their elected leaders are grappling with gigantic revenue losses. So what does it all mean for IT?

Right now, being in local government IT means two things: The work has suddenly taken on a greater urgency, and funding for that work is in danger.

In many ways, technology has been at the center of local government’s response to the pandemic. Testing has been sped up by moving paper forms online. Help centers for critical services have been scaled up to epic proportions. E-signatures, digital services and telework tech have created a pathway for people to interact with public servants in ways that used to be possible only in a physical office space.

But, like the rest of government, IT shops rely on revenue from things like property taxes, sales taxes and parking fees in order to run. And elected officials are sounding the alarm that much of that funding has rapidly disappeared as the global pandemic has forced people indoors.

The National Association of Counties is forecasting $202 billion in budget impacts — a combination of revenue loss and increased spending — through the end of the 2021 fiscal year, while the National League of Cities is projecting $360 billion in revenue loss to municipalities in the next three years. Both report, based on surveys, that most local governments have already implemented budget cuts.

“We’ve already implemented three phases of cuts out of our five-phase plan,” said Arlington, Texas, Mayor Jeff Williams on a recent NLC press call. “The next two phases are more drastic, (we would) do more furloughs and layoffs. This is a key time … many of the cities across America are looking at their budgets right now and planning for their fiscal year, which runs from October through September.”

Where does that leave local government IT departments?

They’re waiting to find out.

Gov Tech in a Pandemic

“We, at least in San Antonio, are holding our own, at least from an IT budget perspective … we’re not asking for more, and we’re not cutting back necessarily,” said Craig Hopkins, San Antonio’s CIO. “We’re trying to hold our current investment both on the op ex and capital side as best we can.”

But he’s waiting to see whether that request is met. In Montgomery County, Md., CIO Gail Roper is also waiting to see how the budget picture shapes up.

“We will have to be very careful about procurement, probably staffing, but we know nothing concrete yet,” she said. “We’re just preparing.”

Roper and Hopkins have been busy finding creative ways to rapidly respond to the needs of their respective governments. Both have found success with flexible options that can be deployed by many types of public employee in many contexts. Roper, for example, counts a low-code digital signature solution as one of her department’s biggest successes for Montgomery County.

“It is a tool that … provides forms, digital signatures and a payment method. We’ve deployed that and actually it has proven valuable because with the low-code types of applications our staff has been able to pick it up, so we’re seeing staff persons, non-technical staff persons, be able to develop forms that they need to have filled out for various reasons with very little interaction with the IT organization,” she said.

Both have expanded existing telework systems to accommodate many more users, and both are still supporting most of the people who went remote.

“Within eight days we went from 200 people logging into our network on a daily basis to 2,800 people logging into our network,” Hopkins said.

In recent years, Hopkins said he has focused on shifting the IT department’s approach from one focused on specific department projects to platforms that can work across the enterprise. That’s paid off during the pandemic. One big example is with San Antonio’s contact center technology, which has capabilities such as soft phones and texting — as opposed to connecting physical telephone lines — that allow the department to add many more call-takers quickly.

“I would say contact centers, for the most part, have probably been the greatest value, because the ability to spin up a new contact center for utility assistance, housing assistance, homelessness, the health department, all of those maybe had a phone line, a direct phone line in the past,” he said. “But we were able to spin all of them up very quickly into contact centers, anywhere from a 10-agent contact center to one (where) we have almost a few hundred agents.”

Some have speculated that the importance of that kind of work could insulate IT departments from the kinds of budget cuts other departments are seeing, if not from project and hiring delays. After all, if government needs to cut costs and run more efficiently, technology can help make it happen.

The Big Budget Battle

There’s also the ongoing fight for federal assistance to consider. By all accounts, the CARES Act relief package passed at the end of March has supported technology work. Hopkins said it has helped to extend San Antonio schools’ Internet networks to low-income areas to support distance learning. On two recent conference calls from NACo and NLC, local elected officials talked about funding from that legislation supporting COVID-specific work in their IT departments.

But the CARES Act sent most of the funding to state governments, and local officials complained that the rigidity of the law prevented them from using it more quickly and effectively.

“Yes, states have received funding intended for cities, but allocating money to states does little to meet the needs of the cities themselves,” said Dayton, Ohio, Mayor Nan Whaley on the NLC call. “Of the $4.5 billion allocated in Ohio in CARES Act funds, for example, less than half of that will ever make its way to cities, and to date we’re looking at 8% that has made its way down.”

As Congress debates the next big relief package, NLC and NACo are calling for more funding for local governments, for it to be direct and flexible — but local aid has become something of a political battle between the House and Senate, leaving many to wonder how they’re going to make steep cuts.

And while the shape of the country’s economic recovery is uncertain, nobody is expecting the budget hits to be confined to just one fiscal year.

In fact, in many places it could be worse in the coming fiscal year. That’s because many cities and counties, smarting from the last recession and buoyed by years of plenty, had been setting aside money in rainy day funds for years.

Right now, they’re blowing through those in order to prop up current fiscal year budgets. So next year, those funds will likely be depleted for a lot of localities.

“Balancing our books this year, nearly $100 million out of $600 million will not be there,” Pittsburgh Mayor Bill Peduto said on the NLC call. “Fortunately we ran operational surpluses in the past six years, but we will spend it all this year just to make payroll. What will that mean for the years [ahead]? Cuts.”

How can local government CIOs plan ahead in that kind of environment?

For some, the answer is that planning simply won’t happen very far in advance. They’ll just have to do the most they can with what’s available.

“Dude, the whole world’s different,” Hopkins said. “You know, all I can do is laugh about it right now because I don’t know what life’s going to look like a year from now. And I’m okay with that, because we just have to adjust. The days of five-year budget plans are gone forever. You can’t even do three-year budget plans. So we’ll do the best we can, from a budget perspective, to look forward.”


Ben Miller is the associate editor of data and business for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.