States' fiscal pictures are brightening, but many programs, including infrastructure, remain under pressure, according to officials from the National Governors Association and National Association of State Budget Officers.

The latest NGA/NASBO Fiscal Survey of States, released on Dec. 1, shows that tax receipts and general-fund spending are projected to climb in fiscal 2011 from 2010 levels. But revenue and spending still will remain below pre-recession fiscal 2008 totals.

Raymond C. Scheppach, NGA's executive director, told reporters, "Budget officers and governors are still very concerned about how do they actually get through the next three years--because they've done everything easy and medium-hard. And from here it's really going to be tough going."

Scheppach says that state spending on infrastructure "is going to be restrained, as is maintenance."

Scott D. Pattison, NASBO's executive director, says, "The bottom line is just money's tight in every possible way--for infrastructure or for any other part of government."

One somewhat encouraging note for construction is that only three states—Missouri, Oregon and Washington—made mid-fiscal 2011 spending cuts in transportation. The total reduction was $8.8 million. That compares with 15 transportation cuts, totaling $419.1 million in mid-2010.

Mid-year reductions refer to cuts put in place after a state budget is approved.

The biannual NGA/NASBO report focuses on states' general funds, not their capital budgets. Pattison says that states will continue to turn to the bond market to fund public works.

He says, "Especially since if there's not the cash from the [American Recovery and Reinvestment Act] for infrastructure, they will look at debt."

Pattison says, "There's no question in my mind that states are fine in terms of debt." He adds, "The issue that they have to deal with is debt capacity," and how much they want to borrow and still maintain their bond ratings.

The report says that for 2011--which for most states began on July 1, 2010--general-fund revenue is projected to climb 4.4%, to $636.3 billion. But it still will be down 6.5% from 2008.

General-fund spending also is predicted to rise 5.3% in fiscal 2011, to $645.1 billion, but that sum is 6.3% less than 2008's $687.3 billion.

One looming problem for states is that funds from the stimulus act are waning. Through the end of fiscal 2011, states say they will have disbursed about $240 billion in ARRA funds. Most of that money has been non-infrastructure related, flexible aid.

But the remaining ARRA funds will run out in fiscal 2012. "There is a significant cliff coming," says Pattison.