NASHVILLE (AP) — The State Funding Board on Monday agreed to revise its general fund revenue projections upward by at least $177 million in the current budget year, and pegged next year's growth at up to 4 percent.

The panel unanimously agreed to the estimates used by lawmakers and the governor to plan state expenditures.

State Finance Commissioner Mark Emkes called it a "pleasant surprise" that revenues are rebounding at a rate faster than had been expected.

"Cuts will not have to be as severe as we thought a couple months ago," Emkes told reporters after the meeting. "But I want to be very clear there will still be some pain in the budget."

The state spending plan for the year that began on July 1 assumed the state would collect about $8.87 billion for the general fund. Those totals have now been moved up to at least $9.05 billion.

Emkes said after a previous funding board meeting that the state should use some of that surplus to replenish the state's cash reserves, and the rest to defray cuts to existing programs.

"The rainy day fund right now is about at $300 million, and if we were to go in another recession, that would not be enough," Emkes said.

Meanwhile, the panel estimates the general fund will grow between 3.75 percent and 4.05 percent in the next budget year, meaning an increase of about $340 million to $365 million in revenues.

The panel is made up of Emkes and three Republican constitutional officers, Comptroller Justin Wilson, Treasurer David Lillard and Secretary of State Tre Hargett.

Wilson said the estimates can't take into account drastic changes that might occur over the course of the next 18 months, including economic pressures from Europe and China.

"Any of those sort of things happen, you will have to adjust your figures," he said.

Republican Gov. Bill Haslam has warned that the state's budget needs in areas like education and health are likely to outweigh the growth in revenues. The governor plans to present his budget proposal to lawmakers a few weeks after they convene on Jan. 10.

"We're going to digest these numbers this week with the governor," Emkes said. "There's still some shortfalls — significant shortfalls — in some areas."