RESTON, Va. -- Total state and local information technology (IT) spending is expected to grow from approximately $55 billion in 2007 to $77 billion by 2012, representing a compound annual growth rate of 6.6%, according to initial findings from the five-year State & Local IT Industry Forecast presented today at INPUTs State and Local MarketView Conference.
Economic growth at the state level has been widespread and a majority of city and county officials are also optimistic about their jurisdictions financial and economic situations. Discretionary spending at the state level grew at near-record rates in 2006 and 2007. This economic environment combined with population growth and a trend toward states and localities setting their own economic, environmental, and social goals, makes the state and local market an increasingly attractive market for IT vendors.
The recent budget recovery has allowed states and localities to make up for some of the program and technology cuts made between 2001 and 2004 - especially in the areas of health care, public safety, and education, said Chris Dixon, manager, state and local industry analysis at INPUT. Growth in discretionary spending will not continue at the 2006-07 pace, but the overall trend will continue to be at or near the historical average. Rising Medicaid costs at the state level, along with infrastructure and public safety costs at both the state and local levels, will drive ongoing interest in technology as a tool for streamlining and improving service delivery in all areas.