Minnesota’s economic forecast shows the the state has a $3.7 billion surplus, potentially giving state lawmakers more money to spend during the 2024 legislative session.

The number is a $1.3 billion improvement from projections released last December, driven by higher-than-anticipated tax collections over the last few months.

“Corporate tax revenue shows the largest change, driven by higher-than-expected corporate profits through the forecast horizon. Spending estimates are largely unchanged from November,” Minnesota Management and Budget released in a statement.

Though the current state budget is stable, the February economic forecast released Thursday shows state spending is expected to exceed revenues through 2027, according to MMB.

The last economic forecast released in December showed a $2.4 billion budget surplus, but the following two-year budget projected an imbalance of nearly the same size. For weeks since the session convened, top Democratic legislative leaders have been preaching fiscal caution to avoid a deficit in the next state budget. The extra money could give them some cushion this session.

Republican House Minority Leader Lisa Demuth said the number shows Minnesota is still “on the verge of a deficit.”

“Republicans have been warning since last session that this rampant spending will only hurt Minnesotans, and this forecast proves that,” she said in a statement.

Last spring, Minnesota lawmakers passed a two-year budget and spent most of a $17.5 billion budget surplus. The main job for lawmakers this year is passing a package of construction projects in a bonding bill, but individual DFL lawmakers have already pitched some new spending on things such as child care and schools.

Minnesota also has about $2.85 billion in its rainy day fund.

State lawmakers will react to the updated economic forecast later this morning.

This is a developing story, check back for updates.