Topeka ? State leaders said Friday that revenue problems are only getting worse and will require deeper budget cuts or bigger tax increases than previously anticipated. Perhaps both.

“We are hundreds of millions of dollars under water,” Gov. Bill Graves said. “We cannot leave here without significant cuts to state government. That’s going to be part of the final story. The question is going to be how severe will the cuts be, and they can only be mitigated by a revenue package.”

Graves comments came three weeks into the 2002 legislative session and after state revenue again dropped below projections this time $41 million under previous estimates for the month of January.

An economic recession and increased costs for social services have helped produce a $426 million revenue shortfall for the current fiscal year and the next fiscal year, which starts July 1.

Now state leaders say the shortfall could easily balloon to $500 million out of an approximately $4.5 billion budget.

Graves has proposed some cuts and a $228 million tax increase through a quarter-cent increase in the state sales tax, 65-cent increase in cigarette taxes and one-cent-per-gallon increase in fuels tax.

Most lawmakers oppose the plan.

Senate President Dave Kerr, R-Hutchinson, and Sen. Steve Morris, R-Hugoton, have instead proposed cutting about $45 million from the current budget, then reducing the state’s year-ending balance to free up about $100 million. Kerr also has endorsed a smaller cigarette tax increase.

The Kerr-Morris plan may be voted on by the Senate next week, but Graves has dismissed the measure, saying the Legislature should focus on fixing the budget for the next fiscal year.

“Let’s get on with the serious discussion, which is how big are the cuts going to be in (fiscal year 2003, which starts July 1), and how big is the revenue package that people are going to consider,” Graves said.

Kerr defended his proposal, saying the Legislature has to start somewhere in cutting the budget.

“It’s just arithmetic. You will either cut deeply or add greatly to the tax burden. There are no easy decisions left,” Kerr said.

Kerr described his proposed cuts in the current year as “mild medicine compared with what we face down the road.”

Social service advocates have said the Kerr-Morris reductions would hurt the elderly and disabled.

Kerr said that if he doesn’t count enough votes in the 40-member Senate for the cuts, he won’t even schedule debate or a vote on them.

“This is a train that will not re-enter the station,” he said.

On Friday, Kerr said he believed a vote on the proposal would be extremely close.

Graves and Kerr agreed that many lawmakers have yet to grasp the severity of the budget problems.

“There have been lots of sound-bite solutions offered, but we’re going to have to have legislators who are willing to publicly express what they’re for and not for,” Graves said.

Staff writer Scott Rothschild can be reached at (785) 354-4222.