The fiscal year starting on July 1 will be another tough one for states, with more spending cuts expected. A new survey by the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO) says one area likely to be trimmed in some states is transportation.

The latest biannual NGA-NASBO �Fiscal Survey of the States,� released on June 3, says that, for fiscal 2010, which ends for 46 states on June 30, state general-fund expenditures will fall an estimated 6.8%, to $612.9 billion.

For 2011, governors� proposed budgets foresee a 3.6% spending rise, but that still would be $52 billion below 2008. If revenue estimates prove optimistic, officials may cut spending midyear.

Transportation hasn�t been spared. Eleven states have proposed cuts in that sector for 2011, and 20 pared it in 2010. The study focuses on states� general funds, not capital budgets. But Scott D. Pattison, NASBO executive director, says states are �really having to cut everywhere, and that includes infrastructure.�

American Recovery and Reinvestment Act dollars have helped, Pattison says, but almost all that money is slated to be spent by the end of FY11. He adds, �They don�t see sufficient revenues making up for [ARRA], and so they are very concerned, particularly about maintenance but also the ability to have the funds going forward, particularly for the large infrastructure projects.�

States narrowed their total budget gap by $169 billion since FY10 began, but a $127-billion shortfall remains. NGA Executive Director Raymond C. Scheppach says states will be reluctant to raise taxes in 2011 and instead will focus on slicing spending. That will be �real tough,� he says, �because states have already gotten the low-hanging fruit, the medium-hanging fruit and the difficult fruit.�