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March 3, 2010
INPUT Forecasts State and Local Government Revenue To Stabilize In 2010
Dependence on Uncertain Federal Subsidies in Housing Market and 2010 Election Results Could Slow Growth
Reston, Va. – March 3, 2010 – INPUT, the authority on government business, today announced the release of its research report, State & Local Fiscal Outlook – Turning the Corner in 2010. The report indicates that state and local governments will begin to slowly regain stability in their revenue streams in 2010 following two years of budget shortfalls. As a result, state and local budget officials will design budgets and project future revenues with greater accuracy and confidence in the year ahead. The report cautions that overreliance on federal underwriting of the housing market and 2010 state and local election results could slow revenue growth.
INPUT projects that state and local governments are vulnerable if the federal government lessens its financial backing for the housing market because their revenues are highly dependent on federal subsidies. Economic growth could become even more sluggish for state and local governments because they will need to cut $250 billion from their budgets during the next four years to compensate for the housing downturn. INPUT’s report also notes that 2010 is the biggest election year in the current four-year political cycle; the results of 37 governor’s elections could impact existing business relationships, regardless of party designation, further slowing revenue growth.
This report reveals that states are relying mostly on attrition (through hiring freezes and elimination of vacant positions) to reduce payroll overhead. Of the states surveyed by INPUT, more than half have attempted to lessen the impact of reduced budgets by instituting hiring freezes (85 percent), eliminating vacant positions (75 percent), layoffs (65 percent) or furloughs (60 percent).
IT spending on the state level was bolstered by the American Recovery and Reinvestment Act of 2009 (ARRA). Moreover, the bulk of the Obama administration’s stimulus for states and localities will be spent in 2010, including $2.3 billion of the $5.7 billion total in IT spending, as forecast previously by INPUT. Projected IT spending from 2009 – 2012 would likely have been flat without ARRA funds.
Questions answered by the INPUT report include:
- What are the four major sources for state and local revenue generation and how were these impacted in 2009?
- How much did the ARRA affect IT spending by states?
- To what extent will the housing crisis impact states in 2010 and beyond?
- Which states have the highest deficits and unemployment rates?
Report Authors: Chris Dixon, manager, State & Local Analysis at INPUT, is available for media inquiries.
Report Availability: State & Local Fiscal Outlook – Turning the Corner in 2010 is available on INPUT’s Web site at the following link: http://tiny.cc/INPUTSLBudget2010
About INPUT
INPUT is the authority on government business. Established in 1974, INPUT helps companies develop federal, state, and local government business and helps public sector organizations achieve their objectives. More than 2,000 member organizations, including small specialized companies, new entrants to the public sector, and the largest government contractors and agencies, rely on INPUT for the latest and most comprehensive procurement and market information, consulting, powerful sales management tools, and educational & networking events. For more information about INPUT, visit www.input.com or call 703-707-3500.
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