Gov. Kathleen Sebelius announcement Tuesday afternoon that she has signed a budget-balancing bill, but softened the cuts in school funding it contained.
Sebelius says she will use allotment authority to cut in half the amount of school funding cuts in the bill. She also vetoed some $9 million in spending increases.
Lawmakers approved the bill that would eliminate a deficit in the budget for the fiscal year that ends June 30 last week. Sebelius received it Tuesday.
A dispute between the Democratic governor and leaders of the Republican-controlled Legislature over that bill is threatening to delay income tax refunds and the next paychecks for the state's 42,000 workers.
The state doesn't have enough money in its main account to pay its bills on time. Sebelius wants to borrow $225 million from other funds throughout state government. But such a move requires legislative leaders' approval, and Republicans have refused until she signs the budget bill.
A meeting of the Finance Council, which would approve the borrowing, is set for 2pm Wednesday. Republican leaders say they will not block the money transfer.
The Associated Press contributed to this report.