Topeka ? Gov. Bill Graves on Wednesday opened the overtime session of the Legislature with more bad budget news by cutting in half a payment to public schools, warning that state employee layoffs and furloughs may be needed and announcing another drop in tax receipts.

Graves called on legislators to suck it up and pass a tax increase to help mend a budget hole that has grown to $750 million and will likely continue to get deeper.

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“To sum up my advice to the Legislature, this is a pill that none of us want to swallow. It’s bigger and more bitter than we ever imagined. Why don’t we just figure out how to swallow it once and avoid having to re-live this scenario going forward?,” Graves said.

“This is a moment where people have to truly figure out how to step outside the political box and understand that these are about the most serious public policy situations that we can ever be in and probably have ever been in this state,” Graves said.

Lawmakers failed to reach an agreement on a budget during a 90-day regular session and reassembled Wednesday after a 17-day break.

Graves’ comments came during a news conference to announce that revenue receipts for April were $50.3 million –or more than 10 percent– below projections. And because the state is further along in processing tax returns than last year, the revenue shortfall is expected to continue through at least May and June, officials said.

The drop below estimates means that the state will probably end the fiscal year on June 30 with its cash balance in the red, further exacerbating the problems with next fiscal year’s budget, officials said.

On Wednesday, the state was scheduled to send school districts $208 million in funds. Instead the state sent $104 million and hoped to deliver the second half of the payment within 10 days. The delayed payment was the third of the year.

Graves warned that furloughs, layoffs, and more payment delays could result from the worsening budget picture.

His budget director Duane Goossen said, “We don’t know where the bottom is yet.”

Revenue Secretary Steve Richards said the slumping tax receipts were the result of Kansans making less money on interest and stock dividends. He said the average state income tax payment was 10 percent less than last year and the average refund was 16 percent more.