Officials from Minnesota Management and Budget will release the state’s latest economic forecast on Wednesday, detailing whether a $188 million budget deficit predicted in December will swing to a surplus.

MMB Commissioner Myron Frans, State Economist Dr. Laura Kalambokidis and State Budget Director Margaret Kelly will outline the new budget forecast at the Capitol. The forecast will set the tone for government spending in this year’s legislative session.

The $188 million deficit was projected before Republicans in Congress passed a major tax overhaul and reauthorized funding for the Children’s Health Insurance Program (CHIP).

The CHIP funding extension was expected to lower the $188 million deficit predicted for the current biennium to $10 million, according to the previous forecast. The forecast released also predicted a $586 million deficit in the 2020-2021 biennium.

Gov. Mark Dayton told business leaders at the Minnesota Chamber of Commerce last week that he was optimistic about the forecast.

“It’s hopeful that next week’s approved forecast will return us to a projected biennium surplus,” the governor said.

Bond rating agencies and financial analysts often use the forecast as a predictor of the state’s financial health.

Last year’s February forecast projected a $1.65 billion surplus — much of which was used on tax cuts, state program spending increases and the state’s individual insurance market.