Oh, Those Poor States

Those people ought to be state governors.

Let's rev up their campaigns now; on just this issue alone our candidates stand a good chance of getting elected. That's because many of the 50 states have budget deficits, despite that every state's constitution -- except Vermont's -- mandates an annual balanced budget.

According to the American Legislative Exchange Council, the following 10 states have the biggest bills to pay: California ($31.4 billion), New York ($11.5 billion), New Jersey ($5.2 billion), Texas ($4.95 billion), Illinois ($4.8 billion), Massachusetts ($3.2 billion), Florida ($3 billion), Pennsylvania ($2.4 billion), Minnesota ($2.1 billion) and Maryland ($2 billion). In total, state-budget deficits total nearly $95.2 billion for 2004 and the remainder of 2003.

Some states have enacted the ever-unpopular tax increase to help close those gaps. Of that dubious Top 10, however, only Pennsylvania and Massachusetts have conceded so far that tax increases are part of corrective action plans. (New Jersey is proposing a gaming tax increase.) The next logical move would be to make substantial spending cuts. That's the route California, Texas, Illinois, Pennsylvania and Minnesota is banking on. Maryland has not suggested how it is going to balance its budget; New York is betting on gaming revenue, fees (which seems to be a fairly ambiguous plan) and tobacco settlement money.

The Business Council of New York has urged New York lawmakers to cut spending, claiming that if lawmakers had simply held overall state-funds spending to the rate of inflation during the past five years, they could have saved the state more than $7.9 billion. And therein lies the key for VARs serving state governments: Showing states how to save money can open doors for you even during these times of cutbacks.

Take VARBusiness' recent Enterprise Spending survey (see April 28 issue). It found solutions that show a return on investment were most successful in finding a place in the enterprise. Our exclusive research also found one of the most powerful ways of securing a contract is to offer a prototype solution. There is no reason the same approaches cannot be applied to solutions in the state government arena.

In addition, VARs can make headway if they show how technology can effectively streamline operations. For example, according to Stateline.org, the governor of Virginia found his state spends $902 million on IT every year. That money goes toward more than 2,500 workers, 3,000 computer servers and disparate e-mail systems. But no more. The governor is aiming to merge all IT staff into the Virginia Information Technologies Agency, which could save $100 million a year.

It could prove quite lucrative for solution providers to come up with viable ways to help states cut their costs. It's imperative to realize that while governments are cutting back on IT dollars, that doesn't mean they are not spending on IT. Solutions that help cut redundancies, reduce other budget-line items and in essence "pay for themselves" will prove to be aces in the hole for both VARs and taxpayers.