Government will continue to spend on essential services and invest in the future

President-elect Barack Obama’s economic stimulus package outlines a significant increase in federal spending on "shovel-ready" construction of roads and bridges, 21st-century school projects, healthcare IT, and modernization of energy-inefficient government facilities. In response, states and municipalities are prioritizing their initiatives based on the greatest short-term impact to their respective regions, and 45 percent of government officials expect to maintain or increase spending activity in 2009. This is according to a new report released today by Onvia, a provider of business-to-government solutions in the United States.

Onvia’s 2009 Government Market Outlook summarizes findings of a recent survey of more than 4,000 government executives, managers, and purchasing officials at state, local, and educational purchasing offices, and reflects anticipated opportunities from the economic stimulus package. The survey looked at projected spending activities in government agencies throughout the country and across the categories of infrastructure, technology, and business services.

Highlights from Onvia’s 2009 Government Market Outlook include the following:

Overall government spending

• 20 percent of officials surveyed project an increase in government spending activity across 2009
• 25 percent surveyed expect levels to remain the same as in 2008
• 55 percent expect spending activity to decrease in 2009
• Public safety and infrastructure ranked as top priorities
• Investment in "shovel-ready" infrastructure projects will be a primary objective, with education, technology, and energy efficiency initiatives also prioritized

State and local

• Overall, state and local leaders are somewhat more optimistic about 2009 as details of President-elect Obama’s federal stimulus package emerged; however, none are expecting intervention by the federal government to be a silver bullet. Many government agencies at the city, state, and county levels have prepared and prioritized lists of the projects in their jurisdictions deemed to have the greatest short-term impact
• 25 percent of county entities report they will increase spending activities in 2009

Education

• 57 percent of educational organizations plan to maintain or grow their spending activity compared with 2008 levels
• 74 percent expect to maintain or increase technology buying activity, with 68 percent planning to maintain or increase spending on construction services and building materials, with the goal to create 21st-century school buildings

Infrastructure

• Overall, 61 percent of government agencies plan to maintain or increase spending activity on infrastructure in 2009
• 59 percent of government agencies plan to increase or maintain spending on architecture and engineering services
• 57 percent of government agencies plan to increase or maintain spending on construction services and building supplies
• In contrast, 51 percent of state agencies plan to decrease their spending on construction services and building materials
• Last year, green initiatives such as energy efficiency climbed 25 percent compared with 2007 as agencies pushed to modernize and reduce operating expenses. This trend is expected to continue as aging government buildings are retrofitted to meet modern day standards

Technology

• U.S. Federal Government spending activity levels have increased over the last two years, and the majority of agencies report they will maintain or grow their investments in technology initiatives for 2009
• As a result of the prospective federal economic stimulus plan, government leaders revised their 2009 projections upward, and now approximately 80 percent expect to spend the same or more on hardware, software, services, and telecommunications, versus less than 65 percent prior to stimulus discussions
• Technology companies stand to gain from the purchases of new computers for classrooms, nationwide integration of electronic medical records, and expansion of broadband services to rural areas

Business services

• The financial services segment will slow its increased spending projections from 2008 and largely attempt to preserve current levels, with 53 percent of agencies anticipating maintaining 2008 levels into 2009

"Looking ahead into 2009, the massive scale of the upcoming federal economic stimulus package has helped to brighten otherwise dim prospects," said Michael Balsam, chief solutions officer at Onvia. "Rebuilding the nation’s transportation systems along with investments in technology will spearhead spending priorities for government agencies as they continue with modernization plans. Even with unclear economic indicators, government at all levels will continue to spend on essential services and invest in the future at cautious but still substantial levels, and this presents many opportunities in what will be a highly competitive landscape for companies that want to secure government contracts."

On Jan. 13 and 14, Onvia will be hosting webcasts with recognized government experts, including the former executive director of the Utah Department of Transportation and the former CIO of the state of New York, discussing the impact of and opportunities expected from the economic stimulus package. For more information and to register, visit www.onvia.com/stimuluswebcast.

To receive a copy of Onvia’s 2009 Government Market Outlook, visit www.onvia.com/2009outlook.