Tax refunds may come later. American states have no money in budgets?

Income tax refunds this year may come later than expected as the recession tightens budgets of most states. While taxpayers expect the cash from their states to help them in at least some way sustain their living tax collections are falling which means the states are not ready to make refunds on time.
 
Missouri this week reported a 4.3% decrease in gross tax collections in the third quarter of fiscal 2009 as compared with the same period in fiscal 2008. Ted Farnen, a spokesman for the Missouri Department of Revenue, said that the state cannot send refunds out as long as there is no money to do it.

Kenneth Lay, revenue secretary of North Carolina, said the state is facing a $2 billion deficit in its current budget and it is about four weeks behind where it would normally be in sending out refund checks. The state expects to catch up by mid-May but the taxpayers are very concerned about delays inasmuch as economy crisis forces them to avail of every possible financing source.

Farnen says that budget cuts in Missouri resulted in department's temporary tax-time staff decrease to 127 from 300 adding to the problem which is especially affecting filers of hard-copy tax returns. Farnen also noted that the average size of individual refunds increased this year by 6.5% to $404 from $379.

In California taxpayers started receiving their refunds last month. Earlier the State Controller John Chiang withheld all payments during the state's more than 100-day stalemate in the legislature over a state budget. The measure was necessary in light of the risk of budget exhaustion.

Kansas taxpayers also could face later refunds this year as Democratic Governor Kathleen Sebelius and the Republican-controlled legislature sparred over patching a hole in the current state budget. An agreement on spending cuts and fund transfers was reached in February.