ST. PAUL, Minn. (AP) — Administration officials say slowing economic growth and a deepening worker shortage has shrunk Minnesota’s projected budget surplus to just over $1 billion. That leaves lawmakers nearly $500 million less to work with as they begin assembling the state’s next two-year budget.

Gov. Tim Walz and other Democratic leaders say the updated forecast shows the need for more spending on education, jobs and transportation, and stepped up efforts to attract workers from other states.

But Republican leaders say high taxes are the problem, and that tax hikes Walz proposes on gasoline and other items will only choke off growth and make Minnesota less attractive.

The updated forecast is now the starting point as legislative leaders set final spending targets for hammering out a budget before the session adjourns in late May.

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