States Struggle to Pass Fiscal 2010 Budgets


With mere days left until states begin a new fiscal year, an unprecedented number have not passed their fiscal budgets for 2010.   At least 19 states are still working to align spending plans with revenues.  According to an article on www.cnn.com,  states are struggling to reduce shortfalls totaling $121 billion for fiscal 2010 as the ongoing recession negatively impacts tax revenues.  “Isn’t the stimulus money going to fix things?” you may ask. 

To a degree the stimulus money will help.  The Administration’s position is the shortfall would be greater without the stimulus.  However, states attempting to fill budget deficit gaps with certain parts of the stimulus are running into road blocks.  Last week, Education Secretary Arne Duncan warned states it may withhold millions of dollars if they attempt to use education stimulus dollars for making up general budget shortfalls.  According to an article in on www.usatoday.com, the comments came in response to Pennsylvania’s Senate which had planned to “reduce the share of the state budget for education while leaving its rainy-day surplus untouched.”

IMPLICATIONS

States will ultimately pass budgets and continue to buy, though clearly spending will be cut across the country in efforts to balance budgets.  Some vendors will go untouched, yet others will find their “honey hole” has dried up.  In all cases, providers need to improve their abilty to help government buyers find alternative means of funding purchases.  Grants, lease options, etc. may open doors that appear to be closed. 

Also, it is not too early to begin building a value proposition for next year’s budget cycle.  The current situation may highlight areas of weakness a business must overcome or influencers/decision-makers it must convince of value. 

Success in government selling comes to those with an understanding of the long-term nature of the business, a strong relationship network, and the ability to weather tough times and uncertainty.  What doesn’t kill us makes us stronger…

-LBB

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