The governor's budget director assured Southwestern Illinois mayors on Thursday that the state's dire financial and budgetary woes are improving.

"We're not about to go off the cliff anymore, but we have a ways to go," said David Vaught, director of the Governor's Office of Management and Budget.

Vaught held an information session with mayors and business leaders to discuss the state's economic climate. Several mayors voiced concern over delays by the state in turning over tax money to cities.

Waterloo Mayor Tom Smith said the state is behind at least three months on income tax disbursements.

Vaught said the state is working to get current on its payments but remains focused on fostering growth.

He said the top challenges for the state are pension reform, Medicaid cost containment and economic growth.

In addition to a multibillion-dollar backlog of unpaid bills, the state currently has an $85 billion long-term public pension shortfall and a roughly $500 million operating budget deficit, despite last year's 67 percent income tax hike.

Gov. Pat Quinn, who delivered his State of the State speech on Wednesday, will give his annual budget address in three weeks.