As state governments focus their efforts on containing the spread of COVID-19, lawmakers must also promote policies that ensure strong economies and a resilient workforce. With businesses slowly reopening and stay at home orders gradually lifting, states are now assessing the budget and fiscal impacts of COVID-19 shutdowns.

One significant challenge stems from states facing glaring discrepancies between their legislative appropriations and the reduction in sales and income tax revenue. According to the National Association of Budget Officers (NASBO), states are projecting hundreds of millions in revenue losses during the next fiscal year. This comes at the same time they’re seeing increased demand for health and unemployment assistance.

To manage these shortfalls, budget officers are looking backwards for guidance from previous economic downturns, like tapping into rainy day funds or seeking federal assistance. But one new tool that should not be overlooked, is utilizing new emerging technologies, like blockchain, that have real potential to help alleviate state budget shortfalls. Technology can provide low upfront costs while simultaneously assuring data reliability, security and transparency. While IT projects have been frustratingly underfunded for years, blockchain technology can provide a solution all states should consider.

Blockchain is a distributed ledger technology that allows individuals to record and share transactional data with a network of users. Blockchains can ensure several levels of privacy, either as an open resource for governments to provide secure publicly available information, or permissioned limited access to a principle administrator or sector of participants. As a record management tool, it offers a variety of applications for online voting, medical records, insurance policies, property and real estate records, copyrights and licenses and supply chain tracking.

A 2019 State CIO Survey, issued in partnership between NASCIO, CompTIA and Grant Thornton, showed that funding to incorporate technologies, including blockchain, has been a major obstacle for state CIOs. Unfortunately, that challenge has been further exacerbated over the past few months.

That said, the current pandemic provides state government officials with added incentive to be innovative and forward thinking to further explore how emerging technologies, specifically blockchain, can help. From managing volunteer efforts, tracking public assistance transactions and providing other data management needs, blockchain has been utilized by businesses for years, and are available now for government use.

For example, IBM created the Emergency Medical Response Platform (EMRP) which streamlines the process of locating, onboarding and granting emergency privileges to healthcare volunteers nationwide. As IBM describes it, the EMPR “creates a single streamlined platform for care facilities and state agencies to make their personnel needs known, eliminating bottlenecks.” The platform allows volunteers to self-direct to locations where resources are needed, lowering overhead costs and avoiding the need for staff coordination. The ledger is encrypted, ensuring data cannot be altered. It creates a trusted source of information where steps taken by a care facility will be immutably preserved, creating a real time audit trail for states and any public information requests.

In a previous CompTIA Blog post, chair of CompTIA’s Blockchain Advisory Council and CEO and CTO of Concordus Applications, Neeraj Satija, stated that blockchain “can be effective in the battle against viral outbreaks—if used judiciously. During times like these, there is a desperate and urgent need for collaboration between different organizations, governments and governmental agencies.” Contract tracing and regional partnerships, for example, continues to gain traction in states as officials try to track and isolate the virus, preventing further spread. Contract tracing is not the only way blockchain is being used to fight COVID-19. From pharmaceutical companies developing vaccines and treatments to healthcare providers monitoring patients medical care and recording medications given, blockchain is helping governments, medical providers and others access data to track trends and identify possible solutions.

Before COVID, many legislators recognized the promise of blockchain technology within their state governments. In 2019, 16 states enacted some form of state blockchain legislation, primarily to study state use. This year, 11 states introduced bills on blockchain. Colorado considered legislation on how blockchain can be used in water resource management and conservation efforts. Connecticut, Tennessee and West Virginia considered test or study legislation in the financial sector where blockchain is more commonly known. A growing trend is legislation, as seen in New York, Ohio, and Illinois, for the potential use of the technology in elections and voter registration. As COVID-19 continues to impact state budgets, officials should rely on blockchain more than ever.

The impact of COVID-19 is going to be felt for years to come. States will continue to feel the budget crunch, and the need for transparency and accountability in distributing state funds will grow. At the same time, state agencies will need to effectively manage limited resources and find innovative and cost-effective solutions to address their myriad needs. Emerging technologies, like blockchain, can serve as a critical tool to address these growing and evolving challenges.

This is the fifth in a six-part series on how COVID-19 is impacting state governments:
Part 1: Updates to IT Infrastructure Will Help Those Impacted by COVID-19
Part 2: What COVID-19 is Teaching Us About Virtual Learning
Part 3: Geolocation – Helping Us Adapt to Our New Normal
Part 4: COVID-19 Further Demonstrates How AI Will Augment Workers Rather Than Replace Them

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