PROVIDENCE –– Rhode Island government’s budget deficits have grown by $200 million over the last six months, a massive jump that exacerbates an already-staggering budget hole and intensifies pressure on the General Assembly to raise taxes or slash state spending across a host of popular programs.

Elected officials have less than two months to close combined budget holes totaling roughly $661 million, according to projections finalized Monday by the state’s top budget officials on the final day of the semiannual Revenue and Caseload Estimating Conference. The shortfall includes an unanticipated current-year gap of $70 million and a $590-million deficit for the fiscal year that begins July 1.

“Whenever you have a major, major reduction in revenue with a very short time to solve the problem, there’s tremendous pressure,” said Rep. Steven M. Costantino, who will oversee the coming budget battle as chairman of the House Finance Committee. “Everybody’s going to have to come together and do what’s best for the state of Rhode Island. There are going to have to be sacrifices on every level.”

Next year’s hole amounts to approximately 19 percent of Rhode Island’s current state budget, excluding federal dollars.

Costantino would not rule out sweeping cuts to human-service programs for the elderly and disabled, reductions in already reduced levels of state aid to cities and towns, or tax increases.

“I think the goal is always not to increase broad-base taxes. That’s the goal,” he said. “Everything is being looked at. I can’t do specifics now.”

The massive shortfall is blamed on the struggling state and national economy.

State government relies largely on income and sales taxes to pay for services and programs, such as subsidized health care, the state police, public transportation and local education. But both revenue streams have fallen victim to widespread layoffs and weak consumer spending.

Income-tax projections over the next 14 months, for example, are $118 million below expectations set in November. Sales-tax projections are down $30 million. Also, the state lottery — including slot-parlor revenue from Newport and Lincoln — will generate $22 million less than expected.

“This is not a surprise. It’s happening here; it’s happening across the country,” said John Simmons, executive director of the business-backed Rhode Island Public Expenditure Council. “It’s a sign of the economy fully hitting the state’s revenue base.”

Just last month, the Assembly adopted a mid-year budget revision to close a current-year hole estimated at the time at $357 million. The package was stuffed with federal stimulus dollars, but it also included a $1-a-pack cigarette tax hike and deep cuts in state aid to municipalities.

It became clear Monday that the contentious revision didn’t go far enough. State leaders now face an additional current-year hole of $70 million.

Costantino suggested that lawmakers would be forced to use the state’s rainy-day fund to close the gap, although state law requires them to replenish the fund the following year.

“It’s available and it’s what it should be used for when your May revenues are off,” Costantino said of the $103-million account. “That’s one of the challenges for 2010 — how you pay back the rainy-day fund.”

Indeed, there will be many challenges for the 2010 budget year, which begins July 1.

Governor Carcieri in March submitted a comprehensive 2010 tax-and-spend plan addressing what was then a budget hole projected at $461 million. But that hole grew by $129 million on Monday.

“Certainly, given the national economy … we had been predicting a softening of the revenues,” Carcieri spokeswoman Amy Kempe said, adding that this is the time for the Assembly to enact meaningful pension reform. “Now we may need to go further and deeper than originally anticipated.”

As the news of the new deficit projections spread throughout Smith Hill, interest groups immediately tried to frame the debate that will dominate state affairs for the next six weeks. The most intense fighting will probably surround taxes.

“We are paying the price not only for national and international economic factors, but also for years of misguided decisions by our policymakers that have cut taxes for those who need cuts the least, while increasing the pressure on the rest of us,” Peter Asen, spokesman for the labor-backed advocacy group Ocean State Action, said in a statement.

The governor’s office, which recently proposed new tax cuts for businesses and high earners, is ready for a fight.

“This is the time where we need to have a fiscal policy that supports our business community,” Kempe said.

speoples@projo.com