Topeka Kansas has temporarily stopped income tax refunds and plans to delay payments to its public schools because of a revenue shortfall this month.
Preliminary figures Friday from the Department of Revenue said the state collected $103 million less in tax revenues than anticipated in May. The state appears headed toward a deficit of about $30 million when its 2009 fiscal year ends June 30.
Anticipating the shortfall, the department suspended income tax refunds Tuesday and expects 22,000 refunds, worth about $11 million, to be affected. Spokeswoman Freda Warfield said the department expects the refunds to be held up a few weeks.
State Budget Director Duane Goossen said the state is supposed to provide $130 million to school districts Monday, to finance their special education programs but will delay the payments for a few weeks. He said it also could delay an additional $52 million in education funding payments due later in June.
Lawrence schools Superintendent Randy Weseman said the delay in payments from the state will require the district to dip into its reserve funds to offset the $400,000 state payment it was expecting.
“There’s no immediate impact because we can cover that for the short term,” Weseman said.
Such actions are designed to buy officials time to find ways to reduce spending in state government. Gov. Mark Parkinson said Thursday night that he is likely to trim the $13 billion budget approved for fiscal 2010 to keep the state from running a deficit.
“Immediately, what we’re trying to do now is get out of fiscal year 2009 in a reasonable and prudent way,” Goossen said Friday.
School districts and other state agencies would likely have to endure further cuts in coming months. The Lawrence school board has already voted to cut hundreds of thousands of dollars from its budget, including eliminating bus service for students who live less than 2.5 miles from their schools.
“This isn’t the end of the cutting. In my mind, it’s just going to continue. The cutting will continue. The level will be determined by people who run the state,” Weseman said.
The state already has had three rounds of budget cuts this year, as the national economic slump has caused revenues to fall short of expectations. Last week, Parkinson signed a bill trimming $138 million from spending previously approved for fiscal 2010.
That budget had appeared to be balanced. But even if revenues met expectations, the state would be left with only $17,000 in cash reserves at the end of fiscal 2010, meaning no cushion if revenues dipped.
“There will be a lot of pressure on him to make allotments pretty quick,” said House Appropriations Committee Chairman Kevin Yoder, an Overland Park Republican. “The quicker he makes them, the easier it gets for state agencies and schools.”
Top Parkinson aides said cuts would occur after the new fiscal year starts in July. Parkinson also has promised to consult legislative leaders and other state officials.
But word that May’s revenue figures would look bad cast a pall over an already gloomy meeting Friday of the state’s top social services official with dozens of advocates for the needy.
Secretary Don Jordan outlined $44 million in cuts that the Department of Social and Rehabilitation Services plans to make to stay within its fiscal 2010 budget.
The agency expects to to reduce foster care services, grants to community mental health centers and cash assistance to the disabled. It plans to eliminate some state aid to groups serving the developmentally disabled, and Jordan said the department is keeping 30 percent of its central office jobs and 14 percent of its state hospital positions open.
“We’ll probably be going deeper every other time we work on the budget in the near future,” he said. “I really do expect that this is not the end of the cuts.”
House Republican leaders on Friday criticized the 2010 budget Parkinson passed with support of Democrats and some moderate Republicans. House Speaker Mike O’Neal, R-Hutchinson, said the 2010 budget only allowed for an ending balance of $17,000 — a small cushion that already appears to be millions of dollars off the mark.
The speaker said he feared the shortfall would lead to future tax increase proposals.
“It is time for a return to sanity in state spending and an end to burdensome taxes on individuals and businesses,” O’Neal said.
The state also could face a lawsuit because it has failed to keep past promises to continue increasing aid to public schools. Schools have lost base state aid of $116 per pupil in this year’s budget cutting.
The state was forced to increase its aid dramatically after the Kansas Supreme Court ruled in 2005 that it had failed to fulfill its duty under the state constitution to finance an adequate education for every child.
Salina public schools Superintendent Rob Winter told The Salina Journal that officials from several school districts plan to meet in July to discuss what to do, mentioning new litigation as an option.
Mark Tallman, a lobbyist for the Kansas Association of School Boards, said most schools can deal with the delay in aid payments by tapping reserve funds. But he noted school boards meet in August to set next year’s budgets and can’t be sure now of how much state aid they’ll get.
As for temporarily suspending income tax refunds, the Department of Revenue also took that step for a few days in February when the state faced an earlier cash crunch.
The department already has paid about 960,000 refunds. Warfield said taxpayers affected by the latest suspension either filed their returns after the normal April 15 deadline, had mistakes on their returns, or faced questions from the department. She also said the department would continue processing returns ahead of resuming payments.