New Administration, New Budget Picture for State and Local Government?
WASHINGTON, D.C. — With a new administration in place and significant policy shifts underway, the future of state and local government IT spending is under scrutiny. At the annual Beyond the Beltway event, technology partners gathered to discuss the challenges and opportunities ahead in 2025.
The beginning of the President’s second term coincides with the nearing end of major investments that have funneled billions to state and local governments, including the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. These changes are expected to reshape innovation efforts.
e.Republic President Dustin Haisler
State chief information officers (CIOs) on hand at the e.Republic event noted that budget conditions have yet to change dramatically, but a tightening of belts appears likely. There is an increase in legislative scrutiny of IT budget requests, reflecting a state-level emphasis on technology-driven efficiencies.
“I’m a little concerned that we are going into an age of austerity,” said Utah CIO Alan Fuller, emphasizing the necessity of justifying new spending with corresponding offsets. The Center for Digital Government survey results, which ranked top technology priorities for CIOs in 2025 at the state, county, and municipal levels, will guide spending decisions.
Virginia CIO Bob Osmond shared the commonwealth’s adoption of a Department of Government Efficiency (DOGE) initiative, launched in 2022, which streamlined operations and reduced costs by eliminating underutilized equipment as well as by negotiating lower rates from vendors. “Once they [the state workforce] started seeing how it worked in real life, they supported it,” Osmond said. “It’s been good for Virginia.” Similar efforts have been announced in Texas, Iowa, and North Dakota.
During the “What’s Next in Government Budgets” session, e.Republic President Dustin Haisler presented data and insights into state and local IT markets. He cautioned against simplistic interpretations of proposed federal changes, noting that the memo regarding possible federal grant funding freezes applied only to unobligated funds.
“The funds are still flowing, the priorities are just shifting around it,” Haisler said, striking an optimistic note about what 2025 will bring for the market. “This is going to be an unprecedented year of innovation in state and local government.”
Overall, state and local government IT spending is projected to surpass $153.6 billion, an increase of 6.4 percent from 2024. States are expected to spend approximately $78.3 billion of that, with cities and counties accounting for the remaining $75.3 billion.
The shift towards a smaller federal government will delegate more responsibility to lower governmental levels, according to Haisler. He anticipates a growing need for creative partnerships to meet resident needs. CIOs emphasized the need for private-sector technology providers to help implement resident impact for policymakers, stating this is crucial in 2025.
“Be willing to stack hands and craft the actual words I can use to talk to the governor and the Legislature,” said Tennessee CIO Stephanie Dedmon.
