The Senate Fiscal Agency projects a $1.3 billion surplus by the end of 2015.
Republican legislative leaders are planning to use it to lower tax rates.
Speaker Jase Bolger told the Detroit Free Press he doesn't have any specifics in mind yet, except that the cuts should benefit individuals and not corporations.
Democratic leaders are on board. They want to get rid of Gov. Rick Snyder's tax on public pensions and restore the Earned Income Tax Credit.