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ST. PAUL — Minnesota’s already-huge budget surplus has become even more enormous, growing to a projected $9.25 billion, the Walz administration announced Monday.

The updated forecast was $1.5 billion more than the whopping $7.7 billion surplus that Minnesota Management and Budget projected in December for the current two-year budget period.

The budget agency cited higher incomes, consumer spending and corporate profit forecasts as reasons for the improved forecast. And spending is running slightly lower than expected on E-12 education and health and human services.

But officials cautioned that there’s uncertainty ahead due to “inflation and geopolitical conflict,” and that they pose a risk to the state’s budget and economic outlook. The projections are based on modeling conducted before Russia invaded Ukraine last week, and the impacts that the war will have on the world economy are still playing out.

An intense debate is already underway at the Minnesota Legislature on how to use the surplus.

Republicans who control the Senate have proposed a permanent income tax cut that would cost more than $8.5 billion over the next three years. They also want to use some of the money to replenish the state’s unemployment insurance trust fund and to eliminate the state’s partial income tax on Social Security benefits, which mostly affects upper-income Minnesotans.

Democrats who control the House favor aiming tax cuts and new spending at lower- and middle-income Minnesotans.

Democratic Gov. Tim Walz and state budget officials planned to issue further details at a news conference Monday afternoon, and legislative leaders from both parties were expected to respond.

But GOP House Minority Leader Kurt Daudt, of Crown, said the surplus bolsters the case for tax cuts.

“Minnesota’s record-setting surplus gives us more than enough resources for permanent and meaningful tax relief for Minnesotans — including an end to the Social Security tax and replenishing the unemployment trust fund,” Daudt said in a statement. “There’s never been a better time to give

Minnesotans their money back as they struggle with record inflation, soaring energy bills, and rising gas prices in the Biden/Walz economy.”