Lawmakers expect a new forecast of North Dakota's tax collections, scheduled to be made public today, will fatten the state's $125 million budget surplus even more. The question in the Legislature is: What to do with the cash?

"It's going to even out at the end," said Sen. Raymon Holmberg, R-Grand Forks, the chairman of the Senate Appropriations Committee. "I'm not losing any sleep over the direction that we're going."

The debate will be complicated by laws requiring that at least some of the money be stashed in two savings accounts, which were set up for surplus oil tax collections and times when general tax revenues are more plentiful than usual.

Some legislators want to devote more resources to colleges or local schools, or set aside enough money to finance 4 percent pay increases for state workers this year and next.

The Legislature's current salary plan would grant a 3 percent raise this year and 2 percent in July 2006, with another 2 percent set aside for raises at the discretion of agency administrators. Critics of the proposal say state workers should be assured of 4 percent increases, with a minimum pay rise for lower-paid workers.

Sen. David O'Connell, D-Lansford, the Senate minority leader, said state employee compensation increases are particularly important, because the Legislature did not set aside money for worker pay rises two years ago.

"I basically think we need to get caught up on our salary increases for state employees," O'Connell said.

Sen. Bob Stenehjem, R-Bismarck, the Senate majority leader, said he would be comfortable setting aside any added revenues for a rainy day. Doing so could help avoid budget problems in the 2007 session, if the Legislature's budget forecasts go awry, Stenehjem said.

"If we're off on our projections, and we're short of money in the next biennium, (the rainy-day fund) is where that money should come from," Stenehjem said.

The new revenue forecast is done by Economy.com, a Pennsylvania economic consultancy, in cooperation with the state Tax Department and North Dakota's budget office.

North Dakota law requires the Legislature to maintain a "budget stabilization fund," to park extra money any time the state treasury runs a surplus of more than $65 million over two years.

The stabilization fund is now empty. It is allowed to hold up to $94 million. The Legislature's most recent projections estimate that $58 million will be transferred into it by June 30, when state government's current two-year budget cycle ends.

North Dakota law says the fund may not be used unless state tax collections are falling at least 2.5 percent behind forecasts. It makes no provision for the Legislature to spend it.

Another savings account, called the permanent oil tax trust fund, makes the budget picture even murkier. State law now says that if North Dakota's oil tax collections run over $71 million during any two-year budget period, the extra money spills into the trust fund. Its principal may not be spent, except by a two-thirds vote of the House and Senate.

Hoeven's budget proposal to the Legislature estimated that the oil trust fund will have $40.8 million by June 30, when the current budget period ends. Many legislators expect today's tax collection forecasts to raise that amount even higher.

How to account for the two funds has given rise to some gamesmanship between the governor's office and the Legislature's Republican majority, whose leadership wants to reduce Hoeven's suggested spending levels.