The following excerpts are from the 2010 Keating Report, which includes analysis of federal, state, and local government spending, as well as an in-depth look at construction and security spending by governments.

Budgets in 2010 generate a fair amount of pessimism in state governments. Staffers from the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO) forecast continued fiscal difficulties for states in their preliminary draft of the biannual "Fiscal Survey of States" report. The groups note that the severe national recession drastically reduced tax revenues from every revenue source during fiscal year 2009, and that state revenue collections are expected to continue their decline in fiscal 2010.

Counties are coping with declining tax revenues by delaying capital investments among other steps, according to a National Association of Counties' (NACo) economic status survey. Four out of five respondents (82 percent) said their communities' budget shortfalls would continue into their next fiscal year. Washington-based NACo represents county governments in the U.S.

Cities, likewise, are managing tough fiscal conditions with a variety of strategies. In its latest "City Fiscal Conditions Survey," the Washington-based National League of Cities (NLC) reports that cities are instituting hiring freezes or layoffs (67 percent of respondents), canceling capital infrastructure projects (62 percent) and cutting services other than public safety (32 percent). Many of the cities that responded to the survey are decreasing spending on non-personnel operating expenses. NLC represents municipal governments throughout the U.S.

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