Kansas puts income tax refunds on hold

State tax refunds, Medicaid reimbursements and payments to local schools are all on hold because of a political showdown between Kansas legislative leaders and Gov. Kathleen Sebelius.

The Kansas Finance Council was to meet at 1 p.m. today to vote on whether to borrow $225 million from healthy state funds to cover expected payments to schools, state workers and taxpayers. The state did the same thing last December when it ran into a cash-flow problem.

But Republican leaders said they wouldn’t authorize the new loans until Sebelius, a Democrat, signs legislation designed to erase the state’s current year budget deficit. That bill, passed Thursday, cuts statewide school funding by $32 million and makes millions more in cuts to other state agencies.

State officials are scrambling right now to determine what the cash flow problem will mean. Budget director Duane Goossen said it’s likely to mean a delay in tax refunds, state employee pay, reimbursement to Medicaid providers and school districts.

House Speaker Mike O’Neal and Senate President Steve Morris have scheduled a press conference at 1:45 to discuss the move, which represents a significant escalation in the battle over the budget.

Democrats aren’t happy.

“The Republicans are playing a game of Russian roulette,” said Senate Minority Leader Anthony Hensley.