(NETWORK INDIANA) – State forecasters predict slow but steady economic recovery in the next two years, giving legislators an extra billion dollars to spend on the next budget.

The state‘s forecast predicts two-percent revenue growth in Year One of the two-year budget and three-percent in the second.

Senate Appropriations Chairman Luke Kenley (R-Noblesville) says it‘s just enough money to force some decisions . He says there‘s pent-up demand for increased spending in education and other areas, while some legislators want to continue the tight spending policies of the last four years.

Expected increases in Medicaid spending could chew up a quarter of the available money, though House Ways and Means Chairman Tim Brown (R-Crawfordsville) says the actual hit may be smaller. He says much of that projection rests on changes in hospital fees likely to be recouped through federal matching funds.

Kenley and Brown are noncommittal about Governor-elect Mike Pence‘s centerpiece proposal for a 10-percent tax cut — both say legislators will have to set priorities.

Kenley says he‘s still skeptical the economy will be as strong as the forecast predicts. Legislators‘ bipartisan team of fiscal analysts plans to reexamine its numbers each month because of uncertainty over the fiscal cliff.