Topeka ? Gov. Bill Graves said he was working on new proposals to cut spending and increase taxes, even as his administration learned that the state’s budget shortfall has grown to $698 million.

Graves said Friday he would meet next week with legislative leaders to discuss proposals for solving the state’s budget problems.

State officials released new estimates for the cost of social services for the next 15 months, adding nearly $12 million to estimates made last November. They also raised the estimated cost of state aid to public schools by nearly $7 million.

Those figures were added to a gap of $679 million between expected revenues and spending required under Kansas and federal laws in the next 15 months.

Graves has said that taxes should be increased enough to cover about half the gap, with spending cuts closing the rest or, with the new figures, almost $350 million worth of each to balance the budget.

“We plan to continue to try to come up with kind of a balanced approach,” Graves said during a Statehouse news conference. “We’ll probably look at some further cuts over what we’ve already proposed, and we’ll have some recommendations for some additional revenues.”

In January, Graves proposed $228 million in tax increases to help close the budget gap.

Without those increases, the budget he proposed would reduce education spending, cut social services, close five minimum-security prisons, cancel nine highway projects and squeeze the budgets of many state agencies.

Graves said he may have new budget recommendations by the end of next week.

“As long as the leadership and many of us are open-minded about what we’re willing to accept and what we’ll compromise on and build consensus on, I just still think we’ll get through this,” he said.

The new figures for social services cover the costs associated with medical services for the needy, nursing home care, cash grants to poor families, foster care for abused and neglected children and adoption services for some of those same youngsters.

The state now expects to spend about $492 million on those services during the current fiscal year, which ends June 30, or about $3.8 million more than originally expected. The figure for the next fiscal year is $547 million, or about $8.1 million more than previously forecast.

In November, state officials added $120 million to their estimates for the costs of social services, making Friday’s estimates look like good news.

“It’s not as bad as I expected, but it’s still adding to our budget gap,” said Budget Director Duane Goossen.

The new estimates for education reflect an expectation that schools will have slightly higher enrollments for September than previously projected. The extra money would cover costs associated with about 1,800 students.

Kansas Legislature: http://www.kslegislature.org