Topeka ? Gov. Bill Graves on Thursday voiced support for a Senate-approved tax increase of nearly $300 million and then stirred a political hornet’s nest by planning to rally fellow Republican moderates at a dinner in Wichita.

Graves and Republican legislative leaders met privately in House Speaker Kent Glasscock’s office to talk about budget and tax issues after the Senate approved an increase in the state sales, cigarette and liquor taxes, and reinstated the inheritance tax on certain relatives.

Asked if he would sign such a bill into law, Graves said, “I’m OK with it.”

The measure is now before the House, where it faces an uncertain fate.

“It would be a huge step in the right direction if we could get the House to agree” with the tax increase, Graves said.

But the proposal faces strong opposition from conservative Republicans who oppose tax increases and Democrats who say the plan would hurt low- and moderate-income Kansans. Democrats prefer adopting new state income tax brackets that would increase taxes on the wealthiest Kansans.

Lawmakers were in the ninth day of an overtime session after they failed to resolve the budget problems during a 90-day regular session.

The Legislature has adopted a $4.4 billion budget but hasn’t nailed down how to pay for it. The proposed budget keeps spending flat for education and social services, which advocates say will results in cuts because of the increased costs of maintaining programs.

Under the bill approved by the Senate, the state sales tax would increase four-tenths of a cent from 4.9 cents per dollar to 5.3 cents per dollar. The tax would decrease to 5.2 cents in June 2004 and to 5 cents in June 2005.

The measure also would increase the state tax on cigarettes by 76 cents, from 24 cents per pack to $1 per pack, and raise a host of alcoholic beverage taxes.

In addition, the bill would reimpose the inheritance tax on distant relatives, and establish a back-to-school “tax holiday” that would take place during the first weekend in August for three years. Under the proposal, state sales taxes would not be assessed on the purchase of any article of clothing, footwear or computer equipment under $500 during that weekend.

Meanwhile, conservative Republicans grumbled about Graves going to speak Thursday evening at the GOP Club’s Leadership Dinner in Wichita.

The GOP Club works to defeat conservative Republicans, and Graves has in the past helped it raise funds.

Several conservatives said that it was inappropriate for Graves to be speaking at such a political function when the Legislature was deadlocked about the budget and taxes.

“It’s just a continuation of a long line of acts of the governor that indicates he doesn’t agree with two-thirds of his party, which is conservative. He jabs his finger in our eyes every chance he gets. Again, it’s terrible timing. The governor needs conservatives to end the session, and he’s slapping us in the face again,” said Rep. Tony Powell, R-Wichita.