So state CIOs and lawmakers face the same quandary as cash-strapped, resource-poor private-sector peers: cut today or invest for tomorrow. For instance, many state tech execs are shelving pricey IT infrastructure projects to cut immediate spending, even though that means higher maintenance and operational costs. The alternative is for CIOs to make the case that IT provides efficiencies worth investing in. Often, though, the savings won't be realized for years, and the spending has to happen now, in the midst of the budget crises--not a great time to ask for money.

For Connecticut CIO Rock Regan, it's not just a bad time to ask for money, it's practically impossible. Budget requests are on hold as work goes on around the clock on the current fiscal year's budget, which has a $650 million deficit. "You can't get in front of the people you need to talk to to discuss good ideas," he says.

Some IT projects in the state are on hold awaiting the budget resolution. "We're unsure if they'll be budgeted and, if so, how much," Regan says. These include a geographical information system for the state's environmental protection agency and fingerprint ID and online prisoner-booking systems. Even projects that Regan is fairly certain will be funded are affected. Contracts for a social-services data warehouse can't be signed until the budget is resolved.

In Georgia, lawmakers want to trim the budget, so the state IT group can't get approval for costly new systems, such as one to track whether people are making child-support payments, that might eventually save the government big money. "What's usually cut are the new, expensive expenditures," says former Georgia CIO Larry Singer, who resigned late last year after voters ousted Democratic Gov. Roy Barnes in favor of Republican Sonny Perdue. Georgia--which spends about $1 billion a year on IT, 6% of its total budget--faces a $900 million shortfall in its fiscal 2004 budget.

Singer says the state needs a new Child Support Enforcement System to replace a legacy system that's a "horrible waste, architected poorly, and managed inefficiently." Georgia spends about $19 million a year on the system, which is part of a program to assure that parents without custody pay child support. A state-of-the-art system would halve the operating cost, meaning the $30 million expenditure would pay for itself in three years, Singer says. But lawmakers look at having to cough up $19 million this coming year to support the existing system and another $30 million to build the new system--nearly $50 million. That kind of money likely won't be appropriated in the trim-don't-add environment.

This approach is familiar to many state CIOs. Michigan's IT organization is in "break-fix" mode, patching rather than enhancing or replacing systems. "The ultimate plan is to replace legacy applications, but that's down the line," acting IT director Jacque Passino says.