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IT Spending in State and Local Government: What Does 2017 Hold?

State and local government CIOs and key industry players met at the annual Beyond the Beltway conference to discuss the IT spending forecast.

WASHINGTON, D.C. — Key tech industry players gathered in Virginia on Monday, March 20, to hear about the IT spending forecast in state and local government in 2017 at the annual Beyond the Beltway conference, hosted by the Center for Digital Government (CDG)* and Government Technology. Total IT spending across state and local government is projected at $101.3 billion, which represents growth of 1.4 percent over 2016. Also likely to increase in proportion to overall IT spending is the number of IT-related opportunities, which numbered nearly 34,000 in 2016.

Spending projections were offered for key verticals:

  • Health and Human Services $26.4 billion
  • Education $23 billion
  • Transportation $10.3 billion
  • Administration and Finance $8.7 billion
  • Public Safety and Justice $7.6 billion
  • Public Works $7.6 billion
  • Environment and Natural Resources $7.4 billion

States Confront Federal Uncertainties

Spending at the state level, while up slightly over last year, still has not returned to pre-recession levels in 32 states. Compounding the challenges faced by states are ongoing debates at the federal level around changes to the Affordable Care Act. Impacts will be greatest to states that expanded Medicaid under the ACA.

As for where spending is on the rise in states, cybersecurity topped the list.


Missouri CIO Rich Kliethermes indicated that the state has had cybersecurity funding linked to data privacy that dated back to 2013. Other state panelists echoed the importance of security cyberfunding, which is becoming easier given the frequency of headlines around the latest data breach. Delaware CIO James Collins made a request of the vendor community in attendance to help shoulder the cybersecurity burden: “We’re looking to vendors to bake the security into their tools and make things easier for our users.”

As the above graphic shows, broadband returned to state CIO priority lists this year, linked to the rise of cloud technologies. In a move typical of many agencies across the country, Utah is moving to the cloud to deal with the deluge of video from law enforcement bodycams — but CIO Mike Hussey reported that officers in rural areas are struggling to upload a shift’s worth of video to the cloud, illustrating the importance of robust connectivity. Colorado Digital Transformation Officer Brandon Williams echoed how critical broadband is throughout his state and reflected on plans to add a broadband office to manage their efforts centrally.

Innovation Shines at the Local Level

A new class of younger mayors as well as friction between largely Republican-led states and Democrat-led large cities is contributing to the growth of innovation in cities that have become less dependent on revenue streams from higher levels of government. The largest percentage of technology RFPs were issued by cities last year, many of them around smart city technology, open data, Internet of Things and civic engagement. All told, cities are expected to spend $30.9 billion on IT in 2017.

But they’re not focused on technology for technology’s sake. IT leaders at the city level are mindful of their mayor’s priorities and how technology can be used to support them. “What are your mayor or governor’s primary goals and how do you line up your investments accordingly?” said Washington, D.C., CTO Archana Vemulapalli. “Have your strategic plan ready for those opportunities.”

Smart city initiatives are an example of an area where local CIOs cautioned not to lead with the technology — rather projects have to serve community needs. In Washington, D.C., officials kicked off an ideation series where they talk to residents about what a smart city means to them. And that can vary from neighborhood to neighborhood. Seattle CTO Michael Mattmiller revealed that Seattle is hiring a smart city coordinator to help advance its smart city initiatives.

And underlying it all is sound infrastructure for connectivity. New York City CTO Miguel Gamiño talked about a plan for pervasive broadband that moves beyond current efforts, like LinkNYC. “The LinkNYC project is important. But it’s one part of a bigger picture needed to make sure everyone has broadband access in homes and businesses,” he said. 

Back to Basics at the County Level

Counties in the U.S. are expected to spend $22 billion on IT in 2017, and CDG Executive Director Todd Sander described the economic outlook in counties as generally positive. More than half of counties have budgets that now exceed pre-recession levels, although counties’ fates depend more on federal dollars, where uncertainty persists given the recent change in administration.

Automation will be key in helping counties account for their shrinking workforces. Oakland County, Mich., CIO Phil Bertolini will lose 30 percent of his workforce in the next three years, which has led him to turn to various strategies to compete for and retain competent staff. Salary increases, remote work options and alternative schedules as well as office perks like standup desks and fewer walls are among the tricks he’s using. Those strategies aside, he’s relying increasingly on contractors to fill workforce gaps. 

Another priority identified by county leaders was shared services. It’s a tactic used by Travis County, Texas, CIO Tanya Acevedo for an evidence management system that enables information sharing across neighboring counties, as well as broadly in the Oakland County, Mich., G2G Cloud Solutions marketplace.

Government CIOs across jurisdictions offered vendors in attendance advice on how best to engage with the public sector in service of constituents. “Our job is to deliver services to residents,” Vemulapalli said. “Put your responsible resident and citizen hat on when you go and talk to government.”

*The Center for Digital Government is part of e.Republic, Government Technology's parent company.