ST. PAUL, Minn. (AP) - Minnesota's economy is headed in the right direction but many people may not be feeling it in their paychecks yet.

That's one takeaway from a report released Thursday.

The budget forecast shows state government on pace for a $1 billion surplus.

But finance officials say longer term economic growth won't be as robust as they were once banking on.

Not as many people are rushing to buy their first home, holding the housing back market some.

And wage growth is happening at a more tepid rate than once expected despite the dropping unemployment rate that could tip the scales in favor of job seekers.

The state's projected surplus is owed to lower-than-anticipated spending, mainly on subsidized health care.

Also, income and sales tax collections are rolling in faster than before.