State governments' fiscal health has always been more cyclical than the federal government's. States have experienced several recessions since World War II, but the Great Recession, though economists tell us is officially over, is different. It's different because of the length of time the fiscal crisis has lasted and the simultaneous negative impact it's had on states' largest revenue streams -- personal income, property and sales taxes. Rainy Day funds have been exhausted and almost all the budget gimmicks have been used. The unprecedented number of new governors that will take office after the November elections will be forced to make some hard decisions about the future viability of many state programs. That leads to a bigger question. What should be the role of state government?

GovManagement.com posted a link this week to a Denver Post article entitled, "DU Study Tackles State Governments' Roles in the Future" that got me thinking about the role of state government in our multi-tiered system of governance. Any state government watcher knows the balance of power between state governments and the federal government swung the feds way during the Bush Administration. Many called the then Republican-led Congress the Imperial Congress.

President Obama promised states a broader role in shaping local policy, but that hasn't turned out to be the case. A recent NewsWeek article said, "the administration has treated states not so much as incubators of federal policy but as agents of it." And that sums up the situation quite well. The current Administration's style might be less imperialistic but they are coaxing state government behavior using contests for federal funding or the strings attached to economic stimulus cash. Gone are the days when states had the flexibility and the financial wherewithal to be laboratories for policy innovation.

The loss of innovation is noted by INPUT each year when we analyze governors' state of the state addresses. A decade ago, these speeches were, to pardon the pun, all over the map in terms of priorities and policy. Now most of them are similar regardless of the governors' political affiliation.

In some cases, states are their own worst enemy, especially when their budgets are structurally unsound with no relationship between spending and incoming revenues. But no matter the reason, 2011 might be a unique time in history when we start a national conversation about the role of state government. If such a conversation gets started next year, it will certainly accelerate in 2012 during the presidential election season. What might be up for grabs? Should the current federal-state partnership for Medicaid change so that it is strictly a federal program like Medicare? Which level of government is best suited to successfully educate our children and adult learners so that the nation stays competitive in a global economy? Is it time to have a national police force instead of the patchwork of agencies we have today? Should licensing and regulation for certain professions be federalized to make it easier to catch those who skip from jurisdiction to jurisdiction to avoid punishment? The list of possibilities is almost endless.

INPUT's Take

The possibility of the federal government taking over state program wholesale may not be on the immediate horizon, but that doesn't mean federal government vendors shouldn't start paying attention to the opportunities such a takeover could present. On the shorter-term front, opportunities for state and local government vendors still exist. They're just not always in the usual places.

• Between 1979 and 2007 state budgets grew at an average rate of 6.5% annually. Expect a new normal for average budget growth, perhaps only 3% to 4%. States will closely question vendors about the price of their products, services or solutions. The strongest justifications will be the ability to cut costs or make government workers more efficient. Review your marketing materials to ensure they provide messaging that will resonate with your buyers. What worked yesterday won't today.
• States will still want to grow their economies and prepare citizens to compete globally. A skilled workforce is essential and is such a valuable asset that governors will look beyond traditional educational institutions. Can your company help? As an example Microsoft has worked with several states to offer Microsoft training as part of larger worker re-training programs.
• Solutions that can support flexible tax and revenue systems will be in demand. The government's ability to quickly change tax codes and implement those changes will be seen as critical by many governors. How can your company play in this part of the market?
• Cooperative purchasing contracts will become more popular as a way to aggregate purchasing and receive the best value for each dollar spent. Make sure your company stays up to date on likely changes to state procurement laws.
• We're likely to see directives for state agencies to inventory programs and functions and look for ways to share services. Silo-ed activities duplicated across several agencies are no longer affordable. K-12 education is a prime area that could make significant cuts by sharing services across districts. Can your company provide the consulting or analytical services that will be needed during the review process?
• Anti waste, fraud and abuse programs are becoming more important to state policy makers. INPUT's recent report analyzes several opportunity areas for vendors to gain anti WFA business.
• Over 60% of states' general fund revenue is spent on education at all levels and Medicaid. Politicians will examine core services, looking to "bend the curve" on cost increases. These will be unpopular decisions so Wisconsin's model for cutting Medicaid may become popular. Does your company have a system in place to monitor the upcoming changes to programs for which they provide solutions? Will those changes affect your business?
• Expect incoming governors to create panels and commissions to look at streamlining government and evaluating government programs. The best groups will include members from industry. Consider getting your company involved to shape the debate.
• Other than Medicaid, correctional costs are the fastest growing category in state budgets and 75% to 80% of those costs are personnel. Reducing prison populations and closing facilities without jeopardizing citizens is of great interest to policy makers. Does your company provide solutions that can effectively monitor offenders who may be released into the community? Or do you provide services that assist prisoners successfully re-enter society?
• In higher education states are looking at several areas to cut costs. One of interest to technology vendors is greater use of technology to deliver course content.

Don't miss INPUT's upcoming State & Local MarketView 2011 webinar, featuring Doug Robinson, Executive Director, National Association of State Chief Information Officers (NASCIO); Alan Shark, Executive Director, Public Technology Institute (PTI); and Chris Dixon, Manager, State & Local Industry Analysis, INPUT.

TechAmerica presented their 2010 Beyond the Beltway conference on March 22, 2010 at the Ritz Carlton in Tysons Corner, Virginia. A key session of the day included Anne Margulies, Chief Information Officer for the Commonwealth of Massachusetts, Karen W. Robinson, Interim Executive Director of the Texas Department of Information Resources and Interim Chief Technology Officer for the State of Texas, and Teri Takai, Chief Information Officer for the State of California.

Anne Margulies kicked off the panel by briefly reviewing the Commonwealth's Information Technology Strategic Plan. Highlights of the plan – and projects currently underway – include consolidation of information technology governance, a new data center that will be 70 percent more energy efficient, an extended broadband infrastructure, which the Commonwealth has received stimulus funding for, and system modernization made possible by the Commonwealth's IT Capital Plan. The Commonwealth is currently in their second year of their five-year Capital Plan that allows the modernization of major systems such as the upcoming motor vehicle system, integrated tax system, and human resources system. Looking to the future Margulies stressed the importance of Health Information Technology (HIT) in Massachusetts and the Commonwealth's goal to be leaders in the endeavor. Other future projects on the Commonwealth to-do list are continuing and advancing their efforts toward open data and government transparency, encouraging civic engagement through the use of social media tools, and revamping their transportation system with smart highways and sophisticated communications. To conclude, Margulies urged vendors who wished to do business with the Commonwealth to do their homework: read their Strategic Plan, come ready to assess the Commonwealth's specific needs, and to treat Massachusetts as an enterprise.

Karen W. Robinson brought a little piece of Texas culture with her as she used a barrel race to explain Texas' plan for technology improvement. Robinson's current plan for Texas is to build momentum so that the state may continue to succeed in their technology endeavors. Robinson attributed each barrel in a barrel race to one of four key attributes to success for Texas and its Department of Information Resources as she talked of good equipment, a healthy lifestyle, a solid team, and finally the ability to continue to move forward. Robinson highlighted the success of Texas' statewide cooperative contracts that has over 2,800 customers within the state. Large projects for Texas, such as the TEX-AN Program were discussed as the first RFO for the project for a Security Operations Center (SOC) will be released in the upcoming weeks (INPUT Opportunities 17053 and 50995). Robinson concluded her portion of the panel by stressing to vendors the importance of teamwork and collaboration when working with the State of Texas.

Teri Takai of California concluded the panel as she presented the California Office of the Chief Information Officer's (OCIO) report card. Highlights of the Report Card include a completed Strategic Plan, an information technology capital plan, a project management office, and a reorganization proposal. With the reorganization proposal, a new order has been created in California in regards to their information technology governance in which all Agency Information Officers (AIO) must be approved by OCIO and any enterprise architecture must also be approved by OCIO. Additionally, a 14 member cabinet of information officers appoints a Information Security Officer (ISO) to each agency. Takai touched on the difficulty found in reorganization due to entrenched agency-specific cultures. However, currently California hopes to take this new order and use it to develop a smooth model toward consolidation that will stand the test of administration change, especially since 2010 is an election year. Other goals for California include a reduction of data center square footage and a possible move toward virtualization. Takai summarized California's current technology environment as consolidating on two fronts: governance and information systems.

To conclude the Big State Update and Outlook panel, conference participants asked the CIOs a series of questions regarding the states' plans for including localities in their consolidation plans and how to build an information technology infrastructure that can withstand change. In regards to localities' involvement in statewide consolidation, all three women responded no for the time-being, stressing the need to focus on the state level first. Margulies however went on to say, that upon successful completion of the Commonwealth's consolidation efforts, Massachusetts plans to work with its cities and towns next. As for the creation of a resilient infrastructure, Margulies stressed the necessity to make the infrastructure administration and CIO-proof, Robinson expanded on that by highlighting the importance of agency collaboration, and Takai concluded by addressing participants in the room, saying vendors need to acknowledge their role in the information technology community.

Following the Big State Update was a panel on State Trends and Issues. Speakers for this panel included Ken Theis, Director and Chief Information Officer for the Michigan Department of Information Technology, Eugene J. Huang, Government Operations Director for the National Broadband Task Force, and Kevin Kampschroer, Director of the Office of Federal High-Performance Green Buildings of the General Services Administration's Public Building Services.

Kevin Theis led the panel with an "opportunity of a lifetime" as he introduced Health Information Technology (HIT). Theis emphasized the ability to influence and reshape the entire health industry by allowing for the capture of information (HIT), the ability to move that information through Health Information Exchange (HIE), and the ability to govern this process through Regional Health Information Offices (RHIO). Theis described Michigan's approach to HIT and their goal to have HIE fully operational by 2014. The State is currently working on their governance model, which is due by the end of April. Theis also stressed the complexity of HIT, particularly when it comes to building and creating a backbone for each state so that they can connect at the national level. Though states are taking different approaches on how to manage their funds and how to develop their HIT programs, Theis concluded his portion of the panel by emphasizing the brevity of the opportunity and the likelihood states will seek out vendors who have proven expertise in the industry.

Eugene Huang gave a brief presentation on the progress of broadband as he went over the goals of the recently released National Broadband Plan. Huang also ran down a few of the recommendations from the National Plan that included the expansion of the wireless communications spectrum, a reform of the universal service fund, providing affordable broadband to lower-income households, building a path to a nationwide public safety network, a reform of the eRate program, and the expansion of the federal networks contract to the state and local network. In terms of what's next for broadband, Huang stated the Plan's recommendations are already being implemented, and the next steps need to be taken by Congress for additional recommendations.

In Kevin Kampschroer's presentation regarding green buildings, Kampschroer made his point very clear as he began by stating if we are not building a green building, it would be more economical to not build at all. Kampschroer stressed the importance of the integration of the function of the building with the manner in which it is built. Kampschroer talked about simple changes, such as turning servers around in a data center as an example, so that heat generated from servers could be recycled for the cooling of the building. Overall, Kampschroer stressed how the minimum standard mentality in building needs to change.

Following the State Trends and Issues panel, a Big City and County update took place with speakers Bryan Sivak, Chief Technology Officer for the District of Columbia, Ron Bergmann, First Deputy Commissioner of the Department of Information Technology and Telecommunications in New York City, and Catherin Maras, Chief Information Officer of Bear County, Texas.

Bryan Sivak led the City discussion as he spoke of his efforts to espouse a philosophy with his governing. Sivak went over his plan to transform Washington, D.C. into an agile government. With an agile process, agile people, and the agile tools, Sivak discussed the ability to transform the way in which government works. He highlighted some projects he has implemented since his appointment in October 2009, which include starting an internal blog for government workers where questions can be posted and answers found moments later. The project started with only six people and within three months has grown to 400 participants. Track.dv.gov is another new development that allows constituents to track their government using a real-time operating tool. According to Sivak, future endeavors for D.C. include the expansion of broadband and the public computing ability.

Ron Bergmann provided a brief overview of technology activity in New York City currently and what the City hopes to accomplish in the coming years. Bergmann stated that the City should be looked at as an enterprise more now than ever before. Recently appointed Commissioner of the Department of Information Technology and Telecommunications, Carole Post, released her 30 Day Report at the beginning of March that highlighted big projects in store for the City. Bergmann expanded upon these projects as he spoke of the City's consolidation efforts and their plans for modernizing the city data centers. Bergmann spoke of three enhanced units: accountability and vendor management, web and media operations, and telecommunications and broadband. Like Sivak in D.C., Bergmann believes New York City will find success in failing early and inexpensively.

Catherine Maras, relatively new to Bear County, provided the sole county overview of the conference. Maras began by introducing Bear County as a county that has been extremely fortunate in the economic recession due to its broad base. Currently Maras explained she is working with her team to develop a finalized working strategy for her office and for the County. To summarize their efforts thus far, Maras described her goals for office to be results-oriented, innovative, and to provide excellent services. Maras stated she and her team are working on defining lines of business for the County. New technology initiatives for the County include a new CAD system, a fully integrated justice system, ERP implementation, GIS, and social media.

The conference concluded with a panel that involved all speakers with the addition of the Honorable James D. Duffey Jr., Secretary of Technology for the Commonwealth of Virginia. Duffey provided an update on the Virginia agreement with Northrop Grumman saying the focus currently is to try and put things back on track with the outsourcing project. When later asked what Virginia's priorities will be three years from now, Duffey responded he wanted to be able to say outsourcing was the right decision. Other questions posed to panelists covered topics such as their ideal sales call, how governments are addressing procurement transformation, and how agencies are coping with retiring baby-boomers.

Day Two of GOVERNING's Outlook in the States and Localities began with murmurs from participants echoing in ballroom at the National Press Club, as they hoped the states' outlook would be less dreary than the previous day. However, as the first panel of speakers began, the dark cloud that hung over the room on Day One, had indeed returned.

The first panel of the day discussed state issues, priorities and politics. Speakers for the panel included David Adkins, Executive Director of the Council of State Governments (CSG); William Pound, Executive Director of the National Conference of State Legislatures (NCSL); and Ray Scheppach, Executive Director of the National Governors Association (NGA).

Ray Scheppach was the first bearer of apparent bad news as he described what he called a "lost decade" and his prediction that it would be 2012 and 2013 before states will begin to see the same revenue numbers that were seen in 2008. While Scheppach praised the American Recovery and Reinvestment Act of 2009 (ARRA) and the flexibility it allowed for state spending, he explained how states are still acting in survival mode as they work fervently to make the most out of the little resources they have. Scheppach highlighted three big issues that will largely shape the outlook of the states for 2010: healthcare reform, some form of a jobs bill, and President Obama's recent recommended budget. William Pound began by highlighting numbers, specifically the budget shortfalls seen in 2009 and those already seen in 2010. Pound pointed out that this trend will continue as stimulus funds – which currently make up approximately 20% of a state's budget – are suspended. Pound predicts that the Federal government's action or inaction will largely shape the future outlook of the states such as healthcare reform and whether or not it will alleviate the current Medicaid burden for which states are responsible. David Adkins alleviated some of the doom and gloom atmosphere by opening with a quote from Woody Allen in which two paths – one to despair and utter hopelessness, and the other to total distinction – depict the current choices states are now faced with. However, despite Adkins' comical, yet negative opening, he offered some hopeful discussion as he pointed out the opportunity that has arisen from our current dire economic environment. State leaders will be forced into adaptive leadership. Common practices and where funds are spent will have to be readdressed in order to produce the same services at a lower cost. Adkins concluded his portion of the panel by pointing out that in US history the nation has endured thirty economic recoveries; there still is a light at the end of the tunnel.

The second panel of the day, covering 2010 revenue and spending consisted of panelists, Sujit CanagaRetna, Senior Fiscal Analyst at the Council of State Governments (CSG); Scott Pattison, Executive Director of the National Association of State Budget Officers (NASBO); and Ron Snell, Director of the State Services Division at the National Conference of State Legislatures (NCSL). Pattison began the panel's discussion by introducing the concept of a New Normal. In terms of state revenue and spending, a New Normal defines a projected slower increase in growth. Pattison pointed out that already 36 FY2010 state budgets have been cut with the possibility for future cuts. According to Pattison, Medicaid and education take up approximately 62% of a state's general fund budget. Ron Snell reported that 40 states predict to see lower revenues for FY2010 compared to FY2009. In a survey of state legislative state fiscal offices, the majority of responding states do not foresee a return to peak revenue collections until the years 2012 and 2013. Snell cautioned that once ARRA funds cease, states will face a cliff when it comes to funding. States will have to reevaluate their spending in order to continue to function normally. Sujit CanagaRetna discussed programs that states are likely to see a surge in expenditures, with a specific case study on Unemployment Insurance. CanagaRetna also cautioned that despite a decrease in revenue, states are likely to see surging expenditures in other major areas such as healthcare, education, and public pensions.

Following the Revenue and Spending panel, three issue panels covering Technology Trends, Health Reform, and the Census 2010 took place. In the Technology Trends issue panel, speakers included Steve Fletcher, Chief Information Officer of Utah; Bert Jarreau, Chief Information Officer of the National Association of Counties; Doug Robinson, Executive Director of the National Association of State Chief Information Officers (NASCIO); and Bill Schrier, Chief Technology Officer of Seattle.

Steve Fletcher kicked off discussion in the Technology Trends panel as he initiated discussion of a common term used throughout the session: consolidation. According to Fletcher, government needs to be perceived more like a business in the current economic environment. In order to enable government services, business processes must be reevaluated and redesigned. Fletcher spoke of opportunities in enterprise technology and cloud computing that could help engage state governments. Doug Robinson echoed the sentiments of Fletcher in regards to consolidation, but also emphasized collaboration, and the possibility for regional clouds. Bert Jarreau and Bill Schrier however discussed the possible inefficiencies of consolidation efforts. Schrier spoke from personal experience when he brought up the possibility of failure, and Jarreau pointed out that while the technical aspect of consolidation may not be difficult, the collaboration of people and local entities can be difficult. Schrier and Jarreau emphasized broadband technology as the key to transformational government. According to Schrier, broadband enables citizens to aid state and local government in the provision of some services. When asked what the upcoming FCC Broadband Plan should include, answers from the four panelists included better overall service, access to rural areas, wireless as well as fiber needs to be addressed, and some sort of adoption strategy needs to be addressed. Other technological innovations were discussed, such as the idea of a virtual, mobile workforce. Though advocates of a virtual workforce, the panelists pointed out impediments state and local governments endure such as a bleak public perception.

The Keynote Speech, delivered by Mark Zandi, Chief Economist and Co-Founder of Moody's Economy.com, followed the issue panels. In his speech, Zandi walked through the recession from its beginning in December 2007 to its recovery in August 2009. Zandi attributed the end of the recession to ARRA, claiming that the recession officially ended once ARRA funds began to trickle downward to the state and local level. Though the recession is officially over, Zandi does not foresee a full recovery anytime soon. While layoffs are abating, companies are still not hiring largely due to a lack of confidence in the economy and policy uncertainty. Housing foreclosures are still rising, while revenue is still decreasing. According to Zandi, policy-makers need to remain aggressive and work diligently to get something solidified in order for the precursors to self-sustaining growth to begin. Zandi provided a timeline in which he predicted self-sustaining growth will begin in Q1 of 2011, however fiscal pressure will intensify by Q4 of 2011 due to the rising debt to GDP ratio, which according to Zandi, the President's recent recommended budget only worsens.

Following the Keynote Speech, issue panels were once again offered, this time in energy, tax, and transportation. In the Energy Outlook panel, speakers consisted of Jeb Brugmann, Interim Executive Director of ICLEI – Local Governments for Sustainability; Mandy Mahoney, Director of Sustainability for the City of Atlanta; and Mark Wolfe, Executive Director of the Energy Programs Consortium. Panelists discussed the growing trend of energy efficiency and key initiatives taking place at the state and local level. Unfortunately, because the trend is still new, there is a huge gap between those states and localities that have advanced in energy efficiency, and those that are still searching for a definition. Panelists agreed that ARRA has helped by providing funding for specific programs, and increasing support. Mark Wolfe discussed how selling energy efficiency still remains difficult, however upgrades to software tools that track and measure energy consumption could benefit the effort.

The final panel of the event consisted of Alan Ehrenhalt, Former Executive Editor of GOVERNING; Josh Goodman, Staff Writer for GOVERNING; and Charlie Mahtesian, National Politics Editor of Politico discussing the political races to watch this fall. As previous speakers already pointed out earlier in the day, 36 governors are up for reelection this fall, which could have a tremendous effect on state and local government for the upcoming years. Panelists agreed that Florida's race will act as a weather vane for other states, and to watch states with unelected governors – such as New York and Arizona – for their outcomes will likely be interesting.

At the conclusion of GOVERNING's Outlook in the States and Localities 2010, it became evident that the upcoming year will hold its fair share of hurdles for state and local government. However, if leaders can adapt and work toward transforming processes, state and local government may be able to bear the long road ahead with few scrapes and bruises.

Unlike state governments, some city and county governments have runoff elections that can carry on well past the November general election date. Here's the rundown on the IT implications of some elections that have recently concluded.

Seattle, Washington
Challenger Mike McGinn won a closely contested race with another Democrat to become mayor of Seattle. McGinn campaigned on one of the nation's most technology-intensive platforms, including a pledge to answer the call of U.S. Secretary of Education, Arne Duncan, for mayors take over failing school districts like Seattle's. He promised to blow the dust off Seattles plan for a publicly-owned fiber-optic broadband network, providing "Internet for all." He also called for intelligent enhancements to the city's mass transit system. He will use technology to make crime reporting easier along with public access to crime data. On the administrative side, he alluded to consolidating the city's major agency-based IT staff with the 200 employees in the city's central IT department and to open up all contracts to public bidding via the Internet. Zoning and permitting processes will be simplified.

Nassau County, New York
This county comprises a populous part of Long Island just outside of New York City. It has seen competitive elections between Democrats and Republicans for many decades. However, the incumbent Democratic county executive was upset by Republican challenger Ed Mangano, who won after an extended recount. Mangano's campaign platform featured his desire to fix the county's tax assessment system. He criticized his predecessor's investment of $50 million in "new technology" and "over 300 new employees" with no reduction in the annual $100 million assessment loss. He also promised to crack down on the county's "disgraceful" and "unforgiveable" tendency to hire out-of-state contractors. He plans to create an Office of Local Opportunity to increase the competition in the county's bidding process.

Atlanta is still conducting a recount in its mayoral race. Check back for the latest on that one (hopefully) later this week.

The findings in these races reflect national trends identified by INPUT. For more insight on IT implications of the 2009 city and county elections, see INPUT's recent national overview report on the topic.

The foreign policy agenda for the incoming Obama administration is finally taking shape with the recent pick of Hillary Clinton as Secretary of State. Senator Clinton is expected to bring President-Elect Obama's agenda of increased diplomacy to the forefront. According to an article published by CNN on December 1, 2008, "Clinton said she would work to restore America's position as "a force for positive change" in the world." The United States Agency for International Development (USAID) being one of the three pillars of US foreign policy (Defense and State being the other two), is expected to play a more important and more dynamic role in future.

However, this is not to say that USAID did not play an important role in the current Administration's agenda. The Bush administration's vision for USAID was different, with the agency's primary focus on global healthcare issues, and utilizing USAID to help rebuild Iraq and Afghanistan.

The Global Health programs are highlighted most by the US President's Emergency Plan for AIDS Relief or PEPFAR Program. This program, which was launched during 2003, is the largest commitment by a nation to fight a single disease in history with a commitment of $15B over the initial 5 years of this program (2003-2008). The program was recently renewed for 5 more years during July, 2008, and available funding was increased to $48B through 2013.

USAID has been heavily involved in rebuilding infrastructure in Iraq and Afghanistan, primarily focusing on developing their infrastructure, and enhancing their capacity to govern. According to a recent GAO Report on contract activity in Iraq and Afghanistan published on October 1, 2008, USAID has 276 active contracts with approximately $1.768B in funding in Iraq and Afghanistan for fiscal year 2007, and the first half of fiscal year 2008.

Under the New Administration's foreign policy lead from the Department of State, expect USAID's Bureaus of Economic, Growth, and Trade (EGAT), and Democracy and Governance (DG) to be heavily invested in over the next few years to help improve America's global image, and provide needed legal and governance assistance to friendly Governments, with the Bureau of Global Health (GH) continuing to lead in many global health issues.

The National Conference of State Legislatures (NCSL) held its annual StateVote Conference on November 7, 2008 in Washington, DC. The experts presenting at the conference summarized election results, hypothesized on what the results mean for the future of the states, and gave predictions on where states are headed. Without the aid of holograms or interactive touch-screen digital maps, Tim Storey, a senior fellow in the Legislative Management Program, kicked off the conference by painting a picture of the new political party control in State Legislatures. He explained that while Democrats made major gains across the board, the Republicans weren't without their own victories. According to Storey, 12 chambers on average change party control every election cycle. The results of this election fell in line with that statistic, thus showing that this election, at least on the State Legislature level, was nothing exemplary. [Don't forget to check out INPUT's new report on the IT implications of the recent state elections.]

Next up on the agenda was Jennie Drage Bowser, an expert on campaign finance reform and ballot initiatives and referenda. She ran through the results of important ballot measures but finished up by saying that the only prevailing trend to extrapolate from the results was that there was no trend. There was no one predominant issue present in most ballots, but rather a smattering of fiscal and social issues such as taxes, energy policy, gambling, gay marriage, abortion, death with dignity, and affirmative action. Ms. Bowser did say that if there was going to be an overarching theme, it would be risk aversion. There were 59 initiatives on the ballots (the same number as 2004), but only approximately 42% of those initiatives passed, compared to 56% in 2004. Given the precarious state of the economy, voters appear reluctant to spearhead new programs.

While the poor economy and risk aversion could possibly be considered themes of the ballot initiatives presentation, they certainly were the themes of the state budgets presentation. William Pound, the Executive Director of the NCSL and an expert on fiscal and public finance issues, and Corina Eckl, the Director the Fiscal Affairs Program at the NCSL, laid out a rather gloomy forecast for state budgets, and emphasized the role that Rainy Day funds will play in closing budget gaps and returning to balanced budgets. Revenue Performance is down. Consumer confidence is down, so people make fewer purchases, resulting in a drop in sales tax revenue. As unemployment rises, personal income tax revenue falls. As business profits drop, corporate income tax revenue drops. Several legislatures have called special sessions to address the increasing gaps. To balance the budgets or merely stave off widening gaps, some legislatures have called for layoffs, travel bans, or reduced benefits. Many states are experiencing severe budget cuts already, and others are predicting cuts in the near future. Targeted programs include education, Medicaid, corrections, and aid to local governments.

As anyone familiar with State and Local government already knows, State and Local lags behind the rest of the government, so while the economy might have already jumped off the cliff, the states are just arriving at the edge. The situation will get much worse before it gets better. The silver lining is that despite shrinking coffers, state governments cannot close shop and head for home – their needs for services and technologies are still growing. They need more with less, and the vendors that can position themselves correctly will remain successful. Contractors need to offer a solution that is both versatile and efficient in addressing multiple issues and can be easily implemented or configured for varying needs. The contexts of government needs might be evolving, but the needs have not gone anywhere. Contractors are encouraged to browse through INPUT's opportunities database to find Forecast-Pre and Pre-RFP opportunities (member login required) in order to be on the cutting-edge of the new face of government solutions.

Of all the changes that will take place with the new Congress in 2009 there may be few that have the potential to impact federal contractors as much as the leadership and composition of the House Oversight and Government Reform Committee. Most of the federal acquisition and procurement reform initiatives that impact technology contractors in recent years have originated in this committee.

Retirements, Defeats, & Bigger Opportunities

Since Rep. Tom Davis, the top Republican on the committee and widely considered a friend to technology vendors, announced his retirement all eyes turned to Rep. Chris Shays of Connecticut and California Rep. Darrell Issa and the impending competition over who would assume the ranking member spot on the committee. But with Shays' defeat on Tuesday it is uncertain if any other member of the Republican caucus can vie for the position over Issa, who has officially announced his intent to seek the position.

To further complicate the issue, the current committee chairman, Henry Waxman, D-CA, has gone public in challenging fellow Democrat Rep. John Dingell of Michigan for the chairmanship of the House Energy and Commerce Committee. It will take some time before we know whether Mr. Waxman will succeed in this coup, of sorts, but if he does move then that means additional leadership transitions on the Oversight committee. Media reports suggest the most likely contender to succeed Waxman as chairman would be Rep. Edolphus Towns, D-N.Y., the committee's senior member. Other potential contenders include Reps. Paul Kanjorski, D-PA., and Carolyn Maloney, D-N.Y.

INPUT's Take

What will all this mean for federal IT contractors? At this early point there are more questions than answers.

• If Rep. Waxman does leverage his way to chair the House Energy and Commerce Committee will that result in broader-sweeping reforms in government acquisition? Or will he have larger fish to fry like energy policy, health care and the environment? Will the contracting community see another attempt at a round of sweeping reforms that get clogged in debate, or will the practice of adding piecemeal reforms to larger bills like the Defense Authorization bill continue to be the approach? Rep. Waxman has been a strong proponent of acquisition reform and a move could quell the momentum we have seen in recent years.

• In the wake of Freddie Mac and Fannie Mae will the Reform panel even take up additional procurement reform or contractor oversight initiatives? They may be more likely to spend their time deconstructing the ongoing financial challenge. On the other hand, if the new congress takes a more combative stance toward the contracting community then we could possibly see sweeping changes.

• How will Rep. Issa shape his role on the panel, assuming he lands the ranking slot? Will he be effective in providing the balance necessary to any such deliberative body? And will the federal vendor community look to him for support or will they seek other channels? Popular opinion is that the exit of Tom Davis leaves a void on the committee and in the House that many may rush to fill.

• And what might we see out of Mr. Gerry Connolly, Davis' Democrat successor in Virginia's 11th Congressional district? Is it possible that he might receive from his party's leadership a seat on the Oversight and Reform Committee? This Northern Virginia district is a hub for many government contractors and high-tech companies and Connolly currently serves as Director of Community Relations for SAIC, one of the largest federal government contractors.

Earlier this week the Department of Homeland Security Federal Emergency Management Agency (FEMA) released Fiscal Year 2009 Application Guidance for 14 federal grant programs, which total more than $3 billion. The funds are aimed at assisting state and local governments strengthen community preparedness. Along with FEMA's Application Guidance, DHS announced its target allocations for FY09 State Homeland Security Program and Urban Area Security Initiative grant programs.

A list of the grant programs allocations for FY09:

• Homeland Security Grant Program- $1.7 billion
• State Homeland Security Program (SHSP)- $861.3 million (Target)
• Urban Area Security Initiative (UASI)- $798.6 million (Target)
• Metropolitan Medical Response System Program (MMRS)- $39.8 million
• Citizen Corps Program (CCP)- $14.6 million
• State Homeland Security Program Tribal (SHSP Tribal)- $1.7 million
• Nonprofit Security Grant Program (NSGP)- $15 million
• Operation Stonegarden (OPSG)- $60 million
• Transit Security Grant Program (TSGP)- $388.6 million
• Freight Rail Security Grant Program (FRSGP)- $15 million
• Intercity Passenger Rail (Amtrak)- $25 million
• Port Security grant Program (PSGP)- $388.6 million
• Buffer Zone Protection Program (BZPP)- $48.6 million
• Intercity Bus Security Grant Program (IBSGP)- $11.7 million
• Trucking Security Program (TSP)- $7.8 million
• Emergency Management Performance Grants (EMPG)- $306 million
• Interoperable Emergency Communications Grant Program (IECGP)- $48.6 million
• Regional Catastrophic Preparedness Grant Program (RCPGP)- $34 million

TSGP, PSGP, BZPP, IBSGP, and TSP grant applications are due on January 13, 2009. Applications for the HSGP programs are due March 20, 2009. The other programs and their application deadlines can be found on INPUT's grant portal.

The release of the application guidance is very comforting for many state and local public safety agencies as many state and local budgets have seen cuts and deficits. INPUT estimates that the SHSP and UASI targeted allocations might change with the election of a new President. It is very likely that these allocations will not be approved by congress until after the inauguration of President-Elect Obama. However, there are plenty of other grant programs that should not be discounted. Some of the grant programs leave the door open for a variety of different projects and should be heavily pursued prior to the approval of the SHSP and UASI programs. Please read INPUT's blog discussing Obama's views on Homeland Security.

Now that the votes have been counted, the government contracting community can finally... keep waiting. After enduring an exciting, yet exhausting 5-year campaign season (that's only a slight exaggeration) and wondering how a new administration would impact technology spending, we will continue to wonder for awhile longer.

First things first. Obama must now implement the smoothest transition possible. In all likelihood, he and his advisors started planning this past spring, creating short lists of potential appointees, identifying policy actions (especially those to be implemented within the first 100 days in office), and plans for setting up his White House personnel.

President-elect Obama may look to Ronald Reagan's transition for inspiration. Reagan had one of the smoothest transitions in history, despite the change in party. We can draw some comparisons:

Transition Planning

Reagan began transition planning early (April 1980) by assembling a team of policy advisers. Obama started his planning in the spring of 2008.

Washington Expertise

Reagan surrounded himself with Washington insiders who knew their way around. Obama has drawn a great deal of expertise from the Clinton administration (e.g. former Clinton policy adviser Rahm Emanual for Chief of Staff; former Clinton Chief of Staff John Podesta to lead his transition team; and former Clinton Treasury Secretary Larry Summers to possibly regain the Treasury post).

Leadership Style

Reagan was said to possess a personal leadership style that inspired loyalty among his ranks. Whatever your political persuasion, Obama's reputation for inspiring is difficult to deny.

While the transition is the most immediate topic of discussion, our community is waiting to see how the new President will use technology in his administration. It was used well in his campaign, but will it translate to government?

The good news is that President-elect Obama seems to be fairly technology savvy. And technology plays a big role in implementing many of the policy initiatives that President-elect Obama stressed during his campaign. Healthcare, energy, and homeland security are the hot areas. Green IT, Health IT, unified communications, electronic warfare, and information sharing are specific technology solutions included in Obama's agenda. The real question is: how much can he accomplish in these areas during his term with a dark economic cloud hanging over his head?

As someone with a background in political "science" and macro-economics who spends all day looking at government and economic issues, I'm fascinated by forecasting in the political as well as economic contexts. I'll bet more than a few of the readers of this blog are the same way. So, on the eve of the election, I thought I'd share some of my favorite recent insights in this area. (Can it really be about to end? I can't recall a time a before this election.)

First, Andrew Gelman, who wrote the excellent book Red State, Blue State, Rich State, Poor State - Why Americans Vote the Way They Do, has a blog by the same name where he cites some simple research by a political scientist who has correlated election outcomes against macro-economic data. So, as I read it, this would point to an Obama win along the lines of 51% to 46% with 3% for all the rest. (That's my estimate of a credible forecast based on Gibbs's conclusions.)

Of course, the electoral college is won on a state-by-state basis, not on national polls. The Wall Street Journal has a nice comparison of state-by-state polling to some key economic indicators, including the decline in housing prices and unemployment rates (which are typically understated in my opinion). I've never seen a rundown like this. The WSJ doesn't draw a definite conclusion from this data, so I won't either. But, it does seem to lean toward Obama.

Finally, an aggregate of polls is only as good as the polls it aggregates. Polling at the national level is tricky enough. By the time you get down to the individual state level, it gets even dicier. The big wrinkle this year is the degree to which the pollsters have included cell phones in their samples. I recently worked a phone bank for one of my county commission candidates and I was calling cell phones with area codes all over the country--a lot more than four years ago, that's for sure. (I asked one chatty long-time resident why she had a California area code and she said she likes for calls to be free for all of her family back home. Go figure!) Polls with cell phones in the sample have Obama leading by even larger margins than those that include only land lines. But, this is the first major test of the cell phone sample in a Presidential election. Will it be another "Dewey beats Truman?"

Oh, well. No one wants to surrender their freewill to economic indicators. All you can do it put blinders on and vote your conscience...or your pocketbook...or some balance thereof. I'll drink a toast to you if you vote for the winner and buy a round for you if you don't.