Topeka ? The 2002 legislative session got another day older and deeper in debt.

Officials with the Kansas Department of Revenue said Friday that the state will write two checks totaling $25 million to settle a decades-old corporate tax dispute with Panhandle Eastern Pipe Line Co.

The first check, worth $12.35 million, will be cut next week; the second one in the amount of $12.35 million, plus $300,000 more in interest, will be paid during the first two weeks of the next fiscal year, which starts July 1.

The payments come as state officials grapple with a projected revenue shortfall of around $500 million in a $4.5 billion budget.

Last month, the Kansas Supreme Court ruled unanimously in favor of Panhandle Eastern Pipe Line, which had sought a refund of corporate income taxes paid from 1981 through 1984. The refund sought was $7.8 million, but interest earnings more than tripled the amount owed the company.

The dispute was over whether Panhandle could file combined tax returns with National Helium Corp. Panhandle said it owned more than 50 percent of National Helium.

But the Revenue Department argued that Panhandle had failed to prove it had a controlling interest in the company.

The Board of Tax Appeals ruled against the Revenue Department, and the state Supreme Court upheld the board’s decision.

Revenue Secretary Stephen Richards was a member of the tax board when it ruled against the Revenue Department.

When Richards became secretary of revenue in December 2000, the case was being appealed and he didn’t think it would have been appropriate to stop the appeal, according to Gayle Martin, a spokeswoman for the Revenue Department.