Topeka ? Gov. Bill Graves on Wednesday cut in half a payment to public schools, warned that state employee layoffs and furloughs may be needed and announced another decline in anticipated tax receipts.

Opening the overtime session of the Legislature, Graves called on legislators to put disagreements aside and pass a tax increase to help bridge a budget gap that has grown to $750 million and will probably continue to get wider.

“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.”

Lawmakers failed to reach agreement on a budget during their regular 90-day session. They 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 the state will probably end the fiscal year on June 30 with its cash balance in the red, further exacerbating problems with the next fiscal year’s budget.

State Sen. Tim Huelskamp, R-Fowler, however, said the development didn’t mean a tax increase was necessary.

“We’ve known there has been a crisis for eight months, and the governor hasn’t cut a thing,” Huelskamp said.

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. It was the third time this year the state has delayed monthly payments to schools.

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

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

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

Huelskamp said the revenue figures showed that this would be a bad time to increase taxes.

“There’s no revenue out there to go get. You can raise the income tax now, and it won’t raise anything,” he said.