Minnesota officials are preparing to release an updated economic forecast that will guide the shaping of the state's next two-year budget, and it's expected to show a smaller surplus than they projected in December.

Minnesota Management and Budget Commissioner Myron Frans and other administration officials will present the forecast Thursday, along with Gov. Tim Walz.

Frans projected a $1.5 billion surplus back in December, but some measures of national economic growth have been slowing. Reflecting that uncertainty, the budget that the governor unveiled last week left about half the surplus unallocated.

Legislative leaders and the administration will use the updated forecast to set final spending and revenue targets as they hammer out budget agreements before the session adjourns in late May.