Current projections peg a state surplus at about $130 million when fiscal year 2012 ends in June, legislative budget chief Cathy Holland-Smith told the Associated Taxpayers of Idaho at its annual meeting Thursday in Boise. The general-fund budget is $2.5 billion.

House Speaker Lawerence Denney and Senate President Pro Tem Brent Hill told the group they expect some lawmakers will press to use a surplus to pay for income tax cuts and possibly an end to personal property taxes. A bill to cut personal and corporate income tax rates by about 50 percent was introduced late last year and is likely to be revived.

"That will be met with some resistance," said Hill, R-Rexburg, who said some lawmakers will seek a way to pay for rate cuts. "There will be those who may consider it if we trade phasing out the investment tax credit at the same time."

Denney, R-Midvale, cautioned that skepticism remains about the strength of economic recovery. "We hear rumors of surplus. But I can tell you the good news is we are growing."

Revenues are down 15 percent from their peak in 2008, an improvement from the steepest decline of 25 percent, Denney said.