LANSING (AP) — State economists delivered their final economic forecast this year for Michigan and indicated that tax revenue will continue to stabilize, which they see as a positive development following years of record surpluses driven by pandemic-related funds.

Michigan lawmakers are working to finalize the state budget ahead of their self-imposed July 1 deadline and Friday’s outlook on the state’s economy and tax revenue projections gives lawmakers a roadmap for the available funds for the fiscal year starting Oct. 1 and beyond.

An outlook was also provided in January as lawmakers began the budget process, but Friday’s was more finalized.

This year’s tax revenue is projected to be approximately $31.7 billion, reflecting a slight increase from January’s estimate.

Revenues are anticipated to grow gradually, reaching $32.4 billion for the fiscal year starting October 1. The following year, a further increase of about 3.2% is expected.

The fiscal forecast came during a revenue-estimating conference held Friday at the state Capitol that included officials from the Department of Treasury, Senate Fiscal Agency and House Fiscal Agency.

“Today’s consensus is that Michigan has a strong and stable revenue and economic foundation for finalizing the state budget,” said State Treasurer Rachael Eubanks. “Our economy is adding jobs and bringing more people back to work, marking a strong recovery in labor participation. This is great news now and for our future.”

Pandemic-related funds resulted in record-setting surpluses for Michigan in recent years, including a $9 billion surplus in 2022, the highest in the state’s history. An $82 billion budget that year spent much of that surplus.

State budgets in the coming years are expected to level out as surpluses are projected to remain below $1 billion.

In February, Gov. Gretchen Whitmer outlined a $80.7 billion budget with a boost in education spending that included funding to provide free community college for all high school graduates and free preschool for 4-year-olds.