No easy pass.

Builders face increased fees on all fronts as state governments struggle to offset one of the worst budget seasons in decades.

BACK-ROOM NEGOTIATIONS OVER LAND-USE PLANNING, FBE INCREASES, and even building moratoriums are taking place nationwide as builder trade groups and public officials sort out tough choices as states face the worst cumulative budget deficits since World War II.

The challenge for home builders and government officials is that the strong economy builders enjoyed the past couple of years created demand for new public infrastructure at a time when state and local governments are least able to afford new sewers, roads, and schools.

Although many states have been hurt by industry layoffs and declining stock market investments--especially tech states like California and Massachusetts--the underlying cause of the state budget crisis is that the rate of revenue growth has declined and fixed costs for salaries, pensions, education, and health care are tough if not impossible to cut. The pressure to spend more on homeland security also has increased in the wake of yet another round of terrorist attacks.

And though state and local governments will receive a $20 billion windfall from the new federal tax cut and spending plan, the money is not expected to solve the ongoing fiscal imbalance. The fear among builders is that the state budget crisis could stall or even sink the housing boom.

"While the state budget crisis won't totally kill off the boom in housing because demand for housing is still high, builders are certainly seeing an increase in attempts by local governments to pass off higher impact fees and other ways for government to shift off the costs to new-home buyers," says Clayton Traylor, a senior staff vice president at the NAHB who's familiar with state and local issues.

"We'll also see state and locals defer much needed capital improvements such as new roads, freeways, and water and sewer capabilities," says Traylor. "And if we start seeing local governments laying off their planning staffs, it will take builders twice as long to get their projects through."

Builders on the front lines see the trouble brewing. Thomas Doucette, president of Frontiers Community Builders in Stockton, Calif., says while the full impact of California's budget deficit hasn't hit yet, builders are seeing pressure in the form of higher impact and building permit fees. …