Financial uncertainty has state IT leaders searching for ‘creative’ solutions

Confronted with an uncertain financial forecast, and dubious support from Washington, North Dakota’s information technology chief said he’s always on the lookout for a “sugar daddy,” another state agency willing to sponsor the initial costs of a new technology platform or needed application that might later be more widely adopted by the state.

Corey Mock, North Dakota’s chief information officer, told the National Association of State Chief Information Officers’ annual conference in Denver on Monday that his IT budget has stayed relatively flat, making funding new projects a persistent challenge. There were increases for employee salaries, but decreases in funding in other areas. Further complicating matters, he said, is that the state’s chargeback model, a common funding scheme for states in which the technology department recovers its costs by charging agencies for the services they consume, can be frustratingly opaque — “We didn’t know how much we were spending.”

Such concerns were common topics of conversation at NASCIO’s event, where top technology officials in state government shared their strategies for dealing with their states’ morphing budgets and a federal policy landscape that is shifting like quicksand beneath their feet.

Some technology agencies are still seeing budget increases, maybe because budgets were set before the full tumult of 2025 could be felt. Mississippi CIO Craig Orgeron said he has more funding this year and that his agency recently gained its first “innovation fund” and a cloud computing “center of excellence,” thanks to recently passed legislation. Orgeron called the former a “nudge fund” that will allow for several pilot projects that could lead to bigger programs. And while he said he’s “very grateful for it,” not all competition for technology funding comes so easy. For updating the state’s aging technology infrastructure, he said, “it has been The Hunger Games.”

Arizona CIO J.R. Sloan predicted that financial uncertainty will “force creativity” in state governments’ IT shops — “We still have to deliver services. Just because someone doesn’t give you some money, doesn’t mean you get to turn stuff off.” He said his broader concern, though, was with what tight financial times could do to his staff: “I get concerned about burning our people out. Those people are going to get pulled in more directions, asked to do more, stretch further.” He suggested that generative artificial intelligence, another ubiquitous topic at NASCIO, might help on both fronts, offering ways to continue the provision of services, while avoiding staff from being overworked.

Maryland CIO Katie Savage said that technical debt and projects to update old systems are “major challenges” she faces against a backdrop of uncertain finances. Maryland, which will gain a new budget secretary next week, must contend with several fast-moving financial questions. Savage pointed out that her state, like all others, no longer receives federal funding for its participation in the Multi-State Information Sharing and Analysis Center, a group that recently lost its agreement with the Cybersecurity and Infrastructure Security Agency. She pointed to the uncertain future of the State and Local Cybersecurity Grant Program, and troubles surrounding the administration of Supplemental Nutrition Assistance Program benefits during the government shutdown.

Amid these and other financial challenges, Savage said she’s trying to disabuse others in her state of the idea that technology upgrades are a simple matter of updating systems that might have been conceived, designed and funded as long ago as the 1960s. Instead, she wants to entirely reconsider the state’s IT systems, maybe by repurposing existing modules.

“We want to think about not just doing a lift and shift, but how do we use the opportunity of some of those systems, either not being supported for cybersecurity reasons by their vendors, or just being in an outdated programming language, how do we use the opportunity to reimagine what they should be doing, or how to make a more efficient process,” she said.

Colorado CIO David Edinger said his state faces unique financial challenges, including that it must return about $1 billion in revenue, from a $16 billion general fund, thanks to a 1992 law called the Taxpayer’s Bill of Rights that restricts how much revenue the state can collect. On top of that, he said, Colorado is one of just a handful of states whose own tax code mirrors the federal tax code. This creates persistent challenges: “When the federal government decides not to tax overtime, Colorado doesn’t tax overtime,” a change amounting to about $250 million in lost tax revenue in Colorado.

Colorado, like many other states, uses a chargeback model, so Edinger’s budget changes according to what agencies are spending. He said the effects of financial changes are therefore often delayed and that planning can be tough — “All of this takes years to play out.” As with Maryland, Colorado will have to decide whether it will cover SNAP benefits, which total more than $120 million in monthly dispersals. It’s a big decision states like Colorado could be forced to make quickly. “That’s some agencies’ entire annual budgets,” Edinger said of the cost of SNAP.

To contend with financial uncertainty, Edinger said his state has put in a hiring freeze, but that it’s hard to know just how conservative to be, because state leaders simply don’t know what’s going to happen next. Savage, the Maryland CIO, said she was fairly certain of one thing: “I don’t see a sugar daddy coming.”