The Strategic Partnerships team monitors legislative and funding activity in all 50 states and at the federal level. That’s because we now provide services in so many states. We pay particularly close attention to legislative sessions because funding decisions reveal how elected officials view the risks and opportunities that will shape their states in the years ahead. We also track legislative funding diligently because of the upcoming contracting opportunities that result.
As of this writing, 49 states have enacted full-year fiscal year (FY) 2027 budgets. South Carolina remains the lone holdout, although legislative negotiators have reached agreement on a final spending plan for the state so this will be completed soon.
Not every state appropriates funding annually. Several states operate under biennial budgeting systems, and some make significant budget adjustments during the second year of a biennium. States that rely on biennial budgeting include Connecticut, Hawaii, Indiana, Kentucky, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oregon, Texas, Virginia, Washington, Wisconsin, and Wyoming.
Among the states that adopted annual budgets this year, California and New York again enacted the nation’s two largest spending plans for FY 2027. Illinois and Florida also approved budgets exceeding $100 billion, while Massachusetts and New Jersey each enacted budgets of approximately $60 billion.
One of the most striking findings is that cybersecurity and technology modernization have become bipartisan priorities. Five years ago, these investments tended to be concentrated in only a handful of states. Today, legislative leaders from both political parties are investing heavily in replacing aging information technology systems, strengthening cybersecurity operations, establishing artificial intelligence governance, expanding digital government services, migrating systems to the cloud, improving identity management, and protecting elections and other critical infrastructure.
Although there are many exceptions, broader funding patterns have also emerged. Republican-led states generally devoted greater attention to tax relief, transportation infrastructure, water systems, public safety, disaster preparedness, economic development initiatives, and technology investments designed to improve government efficiency and reduce operating costs. Democratic-led states generally emphasized affordable housing, public education, public universities, workforce development, healthcare, behavioral health, climate resilience, digital government services, cybersecurity, broadband expansion, and multimodal transportation.
Another noteworthy trend is not necessarily what states are funding but how they are funding it. Many FY 2027 budgets continue to leverage previously awarded federal infrastructure funding, state rainy-day reserves, bond authorizations, dedicated trust funds, public-private partnerships, and one-time capital appropriations instead of creating new long-term operating obligations. Private sector capital investment in large public projects will likely be more attractive than in years past.
The National Association of State Budget Officers characterizes FY 2027 as a period of slowing revenue growth following several years of unusually strong state revenues. As a result, legislative funding decisions are currently being made with greater emphasis on investments that provide long-term value rather than expanding ongoing government programs.
As we reviewed enacted budgets, one question continually surfaced: What are state legislatures telling us about America’s future?
The answers were surprisingly consistent. Many states now view water availability and drinking water quality not only as a public health concern, but also as an essential economic development issue. Housing appropriations reflect growing concern about affordability, workforce shortages, and the need to provide housing in areas where employers struggle to recruit teachers, healthcare workers, law enforcement officers, and first responders.
Technology modernization funding demonstrates widespread recognition that aging systems create significant cybersecurity vulnerabilities, operational inefficiencies, and declining customer service. Investments in ports, highways, and bridges underscore continuing concern over supply chain reliability, freight movement, inflation, and escalating construction costs. Expanded funding for emergency management and disaster recovery suggests that many states are preparing for increasingly frequent and costly natural disasters while also recognizing that future federal disaster assistance may become less predictable. Increased support for public universities and workforce development illustrates the growing competition among states for talent and economic growth.
Based on our review, these issues appear to be the highest funding priorities among state legislatures nationwide: K-12 education, Medicaid and healthcare, transportation, higher education, housing, water infrastructure, technology modernization and cybersecurity, public safety, disaster recovery and resilience, and economic development.
State budgets provide one of the clearest windows into how elected leaders view the future.
California enacted the nation’s largest FY 2027 budget at approximately $351.7 billion, emphasizing education, healthcare, housing, climate initiatives, and infrastructure improvements, while maintaining nearly $29 billion in reserves.
New York approved the nation’s second-largest budget at approximately $269 billion. Major appropriations support Medicaid, healthcare, public schools, transportation, housing, public safety, and assistance to local governments.
Illinois approved approximately $131.8 billion in all-funds spending, with major investments in K-12 education, Medicaid and human services, public pensions, higher education, transportation, and debt service.
Florida enacted a budget totaling approximately $117.6 billion. The state’s largest appropriations include public education, transportation infrastructure, water and environmental programs, law enforcement, healthcare services, workforce development, and reserves.
Massachusetts approved approximately $62.8 billion, focusing heavily on education, healthcare, transportation, housing affordability, local government assistance, childcare, and behavioral health.
New Jersey completed a budget totaling approximately $60.7 billion, highlighted by record K-12 education funding, property tax relief, more than $1 billion in support for NJ Transit, a full pension contribution, higher education investments, and expanded mental health programs.
While political philosophies and funding priorities differ from state to state, this year’s appropriations reveal remarkable agreement on several issues. Modernizing technology, strengthening critical infrastructure, protecting public safety, improving resilience, and preparing a highly skilled workforce have become national priorities. For companies that serve the government marketplace, understanding where states are investing today provides an early indication of where the next generation of public-sector opportunities is likely to emerge.
Photo by Canva
This story is part of the weekly Texas Government Insider digital news publication. See more of the latest Texas government news here. For more national government news, check out Government Market News daily for new stories, insights and profiles from public sector professionals.
