Topeka ? Last year, Kansas officials sent state income-tax refunds to more than 785,500 taxpayers, about 3,700 more than the year before.

No cause for alarm, officials said. The number goes up or down a little each year.

Not this year. Tax officials expect the number of refunds to skyrocket.

“By the end of calendar year 2002, I’m guessing the number of refunds will be well over 50,000 more than what they were in 2001,” said Revenue Secretary Steve Richards.

Richards declined to say how much money would be involved in this year’s refunds.

“That’s not something I feel comfortable predicting,” he said. “There are just too many variables between now and then.”

But the increase is sure to add tens of millions of dollars to this year’s refunds. Last year, state refunds totaled $233.6 million.

State budget officials don’t have a year-end number, either. But much of the state’s budget troubles, they say, are reflected by the refunds made in the first six months of 2002.

“When you add the numbers up, revenues for fiscal year 2002 were down about 7 percent 9 1/2 percent if you don’t count the last-minute transfers,” State Budget Director Duane Goossen said.

“The decline is almost entirely in the area of corporate and individual income tax,” he said, noting that sales-tax collections have remained steady and that unemployment rates have not increased.

Goossen said he expected lawmakers next year to face a $500 million to $700 million deficit in crafting the budget for fiscal 2004, which begins July 1, 2003.

“The decline in revenue was expected, but its depth was not,” Goossen said. “I don’t know of any other state that wasn’t surprised by the magnitude of these losses.”

Most of the increase in refunds is due to taxpayer losses in the stock market, interest earnings and mutual funds.

Richards said that while many taxpayers began incurring losses in 2000, their portfolios still made money. These profits, he said, were taxed in 2001.

But in 2001, these portfolios no longer showed a profit. So in 2002, taxpayers were entitled to refunds.

“The incomes that people and businesses are making today are significantly off that’s the problem, that’s why we’re seeing this big increase in refunds,” said Rep. Kenny Wilk, R-Lansing, chairman of the House budget committee.

Wilk said there was not much lawmakers could do to reverse the trend.

“Cycles in the economy are routine, and right now we’re in the low end of a cycle,” he said. “But what’s not routine are the events of Sept. 11 and the body blow it took on the nation’s economy; in fact, it’s remarkable we’ve absorbed that blow as well as we have.

“All we can really do now is keep our heads up and hope things get turned around.”

But even if an economic recovery started tomorrow, Goossen predicted the state’s revenue picture wouldn’t improve for at least a year, maybe two.

“It’s not going to be quick, it’s going to take awhile,” Goossen said. “There is no quick and easy remedy.”

Jason Edmonds, vice president of investments at Robert W. Baird and Co., a Lawrence investment firm, said recovery was at least a year away.

“We’re in for a long haul,” he said, noting that since the stock market peaked in March of 2000, the 500 largest publicly traded companies have declined almost 44 percent in value.