MINNEAPOLIS (AP/WCCO) — The financial cost of the coronavirus outbreak in Minnesota is front and center Tuesday as state budget officials update the impact the pandemic has had recently on state revenue projections.

Minnesota Management and Budget said that since the February forecast, economic conditions have dramatically weakened and government costs related to COVID-19 have increased.

Late Tuesday morning, officials announced that a deficit of $2.426 billion is now projected for the current biennium, representing nearly a $4 billion change since the surplus projected in February.

Revenue is expected to be $3.611 billion lower during the period, with spending expected to be up $391 million.

At a press conference Tuesday afternoon, Gov. Tim Walz says the state has built up a $2.359 billion reserve, which will cushion the immediate financial blow.

"Thanks to smart budgeting, Minnesota is in a much better position than other states to weather the storm. We must not undercut what got us there: Investing in our children. Expanding access to health care. Putting Minnesotans first," Walz said.

However, the state's economic future remains highly volatile.

"As I said during my State of the State address, there is a long winter ahead. COVID-19 is upending life as we know it -- and our economy will not be spared," he said. "This will mean shared sacrifice among all of us. Hard decisions will be made."

The governor says all options for slashing the deficit are on the table, including layoffs.

"The next wave, in terms of the unemployment, may be state, local and county officials," Walz said.

In a bright note, the governor did authorize hospitals and clinics to resume elective visits and surgeries saying, for now, the state has the capacity and the protective equipment to handle them.

"We believe they are prepared to do it and this action is consistent with guidance from the Centers for Disease Control and Prevention and the Center for Medicare and Medicaid Services CMS," Walz said.

Walz extended a statewide stay-at-home order until May 18 to reduce the spread of the coronavirus, but he has been looking to exempt more businesses amid a growing pandemic.

Health officials said Monday Minnesota's confirmed cases rose by 571 to 7,234, but officials say those numbers are way lower than the actual number of coronavirus infections. Minnesota's death toll rose by nine to 428.

(© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)