WASHINGTON, D.C. — The new administration took over last month, ushering in severalsignificant policy changesaffecting the federal workforce, theU.S.’s approach to artificial intelligence, energy policy and much more. President Trump’s second term also begins as the end is nearing for generational investments that sent billions to state and local governments, namely the Inflation Reduction Act and the Infrastructure Investment and Jobs Act.
At e.Republic’s* annual Beyond the Beltway event, technology firms that do business with government convened to hear how these large-scale changes will impact innovation in states and localities in 2025.
State chief information officers on hand described budget conditions that haven’t changed a lot yet, but there are signs that belt tightening is on the way. Many talked about increased legislative scrutiny of IT budget requests, noting that the focus on finding efficiencies through technology is penetrating at the state level too.
“I’m a little concerned that we are going into an age of austerity,” saidUtah CIO Alan Fuller, adding that any new spending needs to be offset on the other side of the balance sheet.
The data visualization below, based on a recent survey by the Center for Digital Government,* ranks the top technology priorities in 2025 for state, county and municipal CIOs — which will guide spending.
Virginia CIO Bob Osmondsaid the commonwealth’s version of DOGE, the Department of Government Efficiency working at the federal level, was introduced in 2022 when Gov. Glenn Youngkin came into office. Achief transformation officerwas focused on looking for efficiencies in government. Despite some initial apprehension on the part of the workforce, the effort produced some “common sense” changes like eliminating underutilized equipment and negotiating lower rates from vendors on services used by multiple agencies.
“Once they [the state workforce] started seeing how it worked in real life, they supported it,” Osmond said. “It’s been good for Virginia.”
Several other states have announced similar efforts more recently, including Texas, Iowaand North Dakota.
e.Republic President Dustin Haisler presented the “What’s Next in Government Budgets” session, powered by a broad range of data and insights on the market around technology in state and local IT shops.
Haisler encouraged cautious analysis of proposed changes at the federal level, pointing to a lot of nuance that can get lost in mainstream coverage of seemingly far-reaching proposals. A major point of clarification, for example, was the fact that the Office of Management and Budget memo (since rescinded) freezing federal grant funding 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.”
In total, state and local government IT spend is predicted to exceed $153.6 billion, according to Haisler, an increase of 6.4 percent over 2024. Just over half of that — $78.3 billion — will be spent by states, with the remaining $75.3 billion estimated for cities and counties.
The data visualization below outlines specific predictions for spending by vertical area.
Though much remains unsettled on how federal changes will impact state and local technology work, a smaller federal government will shift more responsibilities to lower-level governments. Haisler predicted a growing need for creative partnerships to meet the needs of residents, as well as the importance of having concrete return-on-investment data to make the case for needed technology.
CIOs stressed that they need private-sector technology providers to help make resident impact real for policymakers, and that this is more crucial than ever 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.
*e.Republic is Government Technology’s and the Center for Digital Government’s parent company.
