"You talk with them and assure them they'll get the refund, it's just much slower this year," she said. "And if we don't meet the July 15 deadline, then the state will pay interest — that provides them some assurance."
In Georgia, tax officials say that more than 320,000 returns still need to be processed. If they are not completed by July 16, the state may have to dish out 1 percent interest for each month it is late.
State tax officials say it's not an issue of money, but an issue of staffing. Georgia Revenue Commissioner Bart Graham said the department had to cut about 280 jobs since October, including more than 150 processors who helped file refunds.
The funding problems have become familiar in cash-squeezed states.
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California, which faces a deficit that could top $24.3 billion, may have to issue about $3 billion worth of promissory notes this month to state contractors, college students and taxpayers owed refunds unless there is a budget-balancing agreement.
Smaller states have also had trouble. Freda Warfield of the Kansas Department of Revenue said tax officials are hoping to send out $31 million in refunds by next week — but she knows residents are getting anxious. The returns average $500 a person.
"The revenue receipts have just been down," she said. "There's not enough coming in to issue all of our refunds. Tough decisions needed to be made, and one of the things that we could do is to hold our refunds."
It quickly became a touchy subject there, where thousands of people still haven't gotten refunds. Republican state Sen. Jeff Colyer said he raised the alarm that the state may not be able to make the payments back in August.