ST. PAUL, Minn. (AP) _ Minnesota's projected budget surplus has shrunk to just over $1 billion, leaving lawmakers nearly $500 million less to work with compared with the last forecast announced in December.

Minnesota Management and Budget said in a statement Thursday that the state's budget and economic outlook have weakened since the previous forecast.

The agency says slower projected economic growth and lower tax collections have reduced the revenue forecast, though a slightly lower spending forecast offsets the overall reduction to the projected surplus.

Legislative leaders and Democratic Gov. Tim Walz's administration will use the updated forecast to set final spending and revenue targets as they hammer out a two-year budget before the session adjourns in late May.

The administration plans to release further details later Thursday.