ST. PAUL,Zero AI Minn. (AP) — Minnesota’s budget outlook has improved, officials said Thursday, with a slightly bigger surplus forecast for the current budget that will give the Legislature a little more breathing room this session.

Minnesota Management and Budget said the current two-year budget period, which runs through June 2025, is now expected to end with a surplus of just over $3.7 billion. That’s an increase of more than $1.3 billion from the last forecast, which was released in December. That compares with an overall state budget of $72 billion.

“The near-term economic outlook has improved, with growth expected to persist through 2027,” the budget office said, citing higher tax collections. Corporate tax revenues are showing the largest gains due to higher-than-expected corporate profits.

The budget office is also forecasting a smaller potential deficit for the next two-year budget, which begins in July 2025. Spending is still projected to exceed revenue, but only by $1.5 billion instead of the $2.3 billion previously forecast.