PROVIDENCE, R.I. (WPRI) -- Rhode Island's state government remains in the black, despite concerns on Smith Hill about the end of federal pandemic relief funding. The state is currently on track to finish the current 2024-25 fiscal year with a modest surplus of $77 million when the books close next June, according to a new report issued by state budget officer Joe Codega. That amount represents a little over 1% of total authorized spending out of the state General Fund for this year. The $77 million surplus for this fiscal year would be a reduction compared with the 2023-24 fiscal year, which closed on June 30 with a $292 million budget surplus. It's also well down from the unusually large surpluses the state ran during the pandemic. The new projection is based on actual spending over the summer, plus updated forecasts for revenue and social services, as well as money carried over from last year’s surplus. Revenue for the fiscal year is now expected to come in $68 million higher than previously estimated, while social services are set to cost $23 million less. The expected surplus would be even higher if not for raises awarded to state employee unions over the summer, which will increase personnel spending by $45 million compared with lawmakers' original budget plan from June. Rhode Island’s entire annual state budget currently totals about $14 billion, an increase of over $4 billion since before the pandemic, driven by the huge inflow of federal funds tied to the pandemic and Biden administration policies, as well as rising state-funded spending. The new numbers come as Democratic Gov. Dan McKee and his advisers are deep in discussions about his next budget bill, which is due in January. The rollout of his plan will kick off months of hearings by lawmakers, who usually release a final compromise budget plan in June. In his report, Codega warned state officials to maintain "a cautious fiscal outlook" as they prepare next year's budget. The McKee administration recently forecast a nearly $400 million deficit for the 2025-26 fiscal year, though the new projections of a bigger surplus and higher revenue will lower that number somewhat. Both McKee and House Speaker Joe Shekarchi have warned publicly that they are expecting a more challenging budget cycle ahead as the state adjusts to the exhaustion of federal relief funds. On the other side of the ledger, the state continues to save money due to employee vacancies in some departments, including in the ranks of sheriffs and state police troopers. But Codega said the overall state employee count "has returned to the pre-pandemic level," with an increase of over 800 workers over the last three years. Ted Nesi ([email protected]) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi's Notes on Saturdays. Connect with him on Twitter, Bluesky and Facebook.