ST. PAUL (AP) -- Minnesota officials are forecasting that the state will have a $1.5 billion surplus for the next two-year budget period.

The forecast released Thursday by Minnesota Management and Budget sets the stage for the debate over taxes and spending in the 2019 legislative session. The surplus gives Gov.-elect Tim Walz and the Legislature more room for new spending initiatives, tax cuts or some combination of both.

The agency projects that the state will have $720 million to roll over into the next budget, and it predicts an additional $824 million surplus for the 2020-2021 budget for a total of $1.54 billion. And it says the state's budget reserve now totals $2 billion.

The agency says Minnesota's budget outlook remains sound despite slower growth expected through the period.