DALLAS - Kansas lawmakers on Tuesday approved a $13 billion state budget for fiscal 2010 that relies on spending cuts, fund adjustments, and $585 million in federal stimulus funds to eliminate an expected $680 million revenue shortfall next year.

The budget bill is now before Gov. Kathleen Sebelius, who is in Washington this week for confirmation hearings on her nomination to become secretary of the Department of Health and Human Services.

Total state spending is down $513 million, or almost 4%, from fiscal 2009. Fiscal 2010 will begin July 1. The general fund budget for fiscal 2010 totals $5.8 billion.

The budget cuts state base aid to 295 school districts and their special education funding by about $25 million, or 0.7% of their total budgets. School districts had been in line for an increase in state aid under a multiyear financing plan approved by the Legislature in 2006.

HB 2354, the budget bill, was approved quickly in the Senate by a 35-5 vote, but the reduction in aid to public education was the focus of lengthy debate in the House. The measure eventually passed in the House by a 71-53 vote.

Kansas will save $38 million in debt service in fiscal 2010 by refinancing with 20-year notes the principal due next year on 18 different bond issues supported by general fund revenue.

The provision, proposed by Sebelius, was eliminated from the budget by the Senate Ways and Means Committee because debt service on the notes would total $68 million over the 20-year term, but the refinancing was reinserted by the full Senate to achieve the 2010 savings.

The Legislature was working with a seven-month-old revenue estimate that forecast a deficit of almost $700 million if spending stayed at the levels found in the fiscal 2009 budget. However, as lawmakers were debating the fiscal 2010 budget the Department of Revenue released a report indicating the state's financial situation may be getting worse.

The state took in $57 million less than expected in March, the department said, with $344 million of general fund collections instead of the expected $401 million.

A report from the Kansas Legislative Research Department said total receipts from July 2008 through January 2009 were $29.7 million less than predicted, with general fund tax collections some $82 million less than expected during the period.

The Legislature is set to adjourn on Saturday, and return April 29 for a wrap-up session. A new revenue forecast is to be released April 17, which could require revisions to next year's budget.

Funding for the Kansas Department of Transportation will drop $244 million in fiscal 2010, from $1.49 billion last year to $1.25 billion in the new budget, as projects in the current 10-year capital program have been completed and a new 10-year program has yet to be funded.

In its annual report released on Tuesday, KDOT warned that a lack of funding could cripple the state's efforts to improve its highway system.

"In a word, KDOT's fiscal outlook is best described as uncertain," the report said. "While the federal stimulus package will allow some projects to be built, the state's long-term needs cannot be addressed without new, funded transportation programs at both the state and federal levels."

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