Many of our prospects have asked when the best time of year is to get started in the state and local government market. As you can imagine, we often say, “As soon as possible”, since many of the projects agencies are planning are in the formative stages and the best time to approach an agency is when they are still researching options and are open to suggestion, which is often years ahead of actual procurements. The sooner you engage the better, for the most part.
The conversation usually turns to fiscal cycles, and the differences between the Federal fiscal cycle and the State and Local Government (SLG) cycle. As part of the Congressional Budget and Impoundment Control Act of 1974, the Federal Government shifted from a July 1st (to June 30th) cycle, which mirrored the SLG cycle, to an Oct.1st through Sept. 30th cycle.
The reasoning behind this was that new Congressmen and women, who start on Jan. 1st, need more time to be ready to participate in annual budget planning, so the Federal fiscal year got pushed out an extra quarter.
The reason fiscal years for States fall on July 1st has to do mostly with property taxes, which have a delinquent date of March 1st the following year, after an Oct. 1st due date. Most get paid, as you can imagine, at the last minute. This leads to budget planning after that money is collected, which has caused fiscal years to start at the beginning of the next quarter. It also doesn’t hurt that school years end in June, as well.
Of course, if it were all that easy, this article would not need to go on. It turns out that only 46 of the states are currently on July 1st cycles. New York’s begins on April 1st, Texas’s begins on September 1st, and Alabama and Michigan’s start on October 1st. US Territories are on the Federal Cycle.
To complicate matters even further, many local governments are on their own cycles which often vary within states.
My research led me to several articles worth reviewing regarding staggered fiscal cycles within States. These, I felt, perfectly summarized the difficulty in discussing this issue:
* This article discusses several of the states, including three of the major states for IT procurement in the country, New York, Texas, and Florida, and how their cycles work at local levels: https://cga.ct.gov/2015/rpt/pdf/2015-R-0103.pdf
* This link shows how New York State Fiscal Years work for all the counties, cities, fire districts, towns, and villages statewide, with very odd fiscal years for quite a number of local governments. To be honest, it’s mind-boggling: https://www.osc.state.ny.us/localgov/finreporting/fyes.pdf
* The National Association of State Budget Officers website has a lot of useful data: http://www.nasbo.org/mainsite/resources/proposed-enacted-budgets
* To complicate matters further, some states operate on Biennial (2-year) Budget cycles, usually with annual review sessions in mid-cycle, but two states, have true biennial budgets (North Dakota and Wyoming): http://blog.c2er.org/2015/04/annual-versus-biennial-budgeting/
* A helpful chart on each state and budget cycle: http://blog.c2er.org/2015/04/annual-versus-biennial-budgeting/
Given all this, a vendor should examine their territories of interest and make logical decisions from there.
Here's another complication regarding when to get started in the SLG market: Grant monies are released independently and can be huge drivers for procurement activity. Federal Grants make up nearly one-third of state budgets. (This is a very interesting recent article on Grants: https://www.cbpp.org/research/state-budget-and-tax/at-risk-federal-grants-to-state-and-local-governments).
For example, when Grants were made available in 2015, after a huge amount of media attention regarding potential officer misconduct, the bodyworn camera market took off. A smart vendor will know which grants are available to state and local government agencies looking to procure their specific services, when they become available, and how an agency can apply for them. This is probably a topic for another article, but feel free to contact CJIS GROUP for help with these kinds of questions.
In summary, the fiscal cycle question, with regards to the SLG landscape, is a very confusing one, often with variations from town-to-town in the same state. The best time to engage in the market often varies by agency and project. Some agencies spend money as soon as they get it, others hold off and buy towards the end of their fiscal years, just to be safe. One thing holds true, though: the sooner you can get into the mix, and engage with agency project managers while they are still planning a project, the better, and, if possible, well-before funding is secured.
In general terms, though, the late spring to summer window would have to be considered optimal, as agencies who hold-off spending right away finally spend left-over monies, and the early spenders get new budget monies and start buying in July.
-Rick Baamonde, Director of Sales