As budgets get tight, states consolidate

Crunching budget numbers

$25.7 billion'cumulative state budget shortfall in 2003

$2.5 billion'state budget shortfall in 2004

$35.6 billion'projected cumulative shortfall for 2005

$15 billion'California's share of the 2005 shortfall, 42 percent of the total

4'states with 2004 surpluses of 5 percent or more: Delaware, Florida, Nevada and Wyoming

Source: National Conference of State Legislatures

Washington, D.C., CTO Suzanne Peck says IT is an investment, not an expense.

The economic downturn that has squeezed IT budgets over the last four years is forcing many state and local governments to consolidate systems to cut costs.

Even the few states that are reporting mild economic improvement aren't planning IT shopping sprees anytime soon.

For example, the Iowa Legislature has mandated that the department conduct a study on combining three of its mainframe data centers, said John P. Gillispie, chief operating officer for the state's Information Technology Enterprise.

The state, which has reported modest improvement, also is beginning to roll out some new IT initiatives, Gillispie said. It is looking at increasing its e-government programs, such as putting applications for food stamps online.

The economy also is perking up in the nation's capital. Washington, D.C., recently received a bond rating of A- from Standard & Poor's Corp. of New York, a Wall Street investment firm. The company also listed the district's economic outlook as 'positive.'

'Five years ago they rated us as junk bond status,' said Suzanne Peck, Washington's chief technology officer. Now the city is the only major municipality with a bond rating that is advancing, Peck said.

The district is working to maintain its sunny economic outlook with IT consolidation. Last year, the city consolidated nine data centers into two, which resulted in a yearly savings of $1.2 million, city officials said.

Washington last month launched a $93 million OC-48 Synchronous Optical Network to connect 400 locations, including office buildings, schools, libraries and emergency call centers. The network will support data transfer, and the city plans to add voice over IP, videoconferencing, traffic light management, emergency calls, webcasting and a storage area network.

Ultimately, the network, known as DC-Net, will pay for itself by eliminating the city's annual $30 million communications bill. 'D.C. really understands that technology is an investment, not an expense,' Peck said.

Other states have been slower to rebound.

Since September 2001, Kansas revenues have dropped more steeply than at any time since the Great Depression, Gov. Kathleen Sebelius said in her state of the state speech this year.

Like Iowa and Washington, D.C., Kansas is looking at IT consolidation to boost productivity and help make ends meet. Sebelius formed teams to target waste and redundancies and improve the way the state does business. The Budget Efficiency Savings Teams, or BEST, have recouped more than $84 million in the first year, Kansas officials said.

The BEST IT team is getting ready to tackle a review of Kansas' telecommunications billing process, cell phone and paging services, PC procurement and IT contracts in general, said Jeff Lewis, CIO for the Kansas Human Resources Department.

'We're looking to consolidate functions that all agencies do'help desk, data centers and e-mail systems,' said Denise Moore, director of Kansas' Information Systems and Communications Division.

Oregon also is considering consolidating data centers to save money. The state was hit particularly hard by the most recent recession.

'We took a real nosedive after the 1990s,' said Cindy Becker, assistant director for the Administrative Services Department. With no sales tax, Oregon relies on personal income tax for revenue. 'When the economy goes bad, it's like a triple whammy,' Becker said. State revenues have fallen by $2 billion over the past four years. 'There are signs of life, but it's been really devastating,' she said.

Susan M. Menke contributed to this article.

About the Author

Trudy Walsh is a senior writer for GCN.

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