The budget pressure on Minnesota lawmakers eased slightly with an economic report Tuesday that projects the state’s deficit shrinking to $994 million — although warnings of a bigger problem to come fed the political tension.

Revised budget estimates released by state officials show about a $200 million drop in the deficit from a forecast produced a few months ago. It’s the first time since February 2008 that lawmakers have been presented with a deficit projection below $1 billion.

“This is continued evidence our economy has bottomed out,” said Minnesota Management and Budget Commissioner Tom Hanson. “We are in the long, slow road to recovery.”

The more-positive forecast is for the budget that runs through the middle of next year. But the outlook deteriorates again in the long term, with a deficit for the next two-year budget period expected to swell to $5.8 billion. That projection for fiscal years 2012-13 had been $5.4 billion in December.

Republican Gov. Tim Pawlenty has proposed resolving the current deficit mostly through spending cuts; Democrats in charge of the Legislature haven’t released their own plans yet. They have until May to fix the shortfall.

Pawlenty said he wouldn’t revise his plan and denied that he would be leaving a fiscal mess for his successor when his term ends next year.

“We have balanced the budget every time I’ve been governor, every two years, and it will be balanced in the future,” he said. “And the notion that it won’t be is a projection.”

Top Democrats said that although federal help and lower state spending improved the short-term picture, the underlying financial problems remain. Senate Majority Leader Larry Pogemiller of Minneapolis said fixing the deep hole Pawlenty will leave ultimately will require a mixture of new tax money and spending cuts.

“This goes well beyond math. We’ve got to get Minnesotans back to work,” said House Majority Leader Tony Sertich of Chisholm.

Legislative Republicans challenged Democrats to bring forth their own proposals.

“All we’ve heard from the majority parties in both the House and the Senate is, ‘We hate the governor’s plan, we don’t like it and we don’t like him. Oh and by the way, where is he?”’ said House Minority Leader Kurt Zellers of Maple Grove. “The governor’s been here.”

Minnesota has a current two-year budget of $31 billion. But revenues lag far behind the expected costs.

Lawmakers had expected a near-term improvement because of positive signals on the economy, including an improving employment picture and better-than-expected tax collections in January. State leaders also learned they would get more federal help paying for Medicaid programs, reducing Minnesota’s budget burden by more than $80 million.

State economist Tom Stinson said the long-term outlook could brighten if the job market perks up, people buy more goods subject to sales taxes and there are other changes outside lawmakers’ control.

“This isn’t weather forecasting, this is economic forecasting,” Stinson said. But he stressed that there was more reason to be optimistic than there was over the past year. “We think the economy is on the verge of turning up.”

But he warned that conditions are too volatile to predict numbers so far out. For instance, payroll levels under the best-case scenario aren’t expected to reach pre-recession levels until spring 2012, which costs Minnesota income taxes.

There were cautionary notes sprinkled throughout the report: Nearly 1 out of every 7 state residents who wants a full-time job can’t find one; about 1 in 6 homeowners owe more on their home than it is worth; and officials anticipate only 29,000 new jobs in Minnesota over the next 12 months — not enough to keep pace with new people entering the work force.

Lawmakers can take some steps this year to drive down that future deficit.

Pawlenty has urged legislators to ratify budget cuts he made on his own last summer. Because he was using an executive power, spending for the affected programs are due to bounce back after July 2011.

Adopting his cuts in law would lower the future deficit as would any additional permanent spending reductions the Legislature approves this year. Pawlenty said if his budget plans were enacted without changes, the future deficit would be around $2.8 billion.

As it stands, the state must repay a portion of aid payments to schools that were delayed as part of Pawlenty’s balancing plan. That accounts for $1.2 billion of the 2012-13 problem, although lawmakers could decide to push portions of the repayment off.