HELENA — Montana's budget picture continues to improve beyond the original expectations of the state Legislature, as lawmakers were told Thursday there could be close to $500 million in surplus when they convene in 2013.

Budget staffers now predict there will be an extra $168 million in state coffers compared to what was first estimated for the two-year budget that began in July. The extra money means that lawmakers could go into session next year starting with a surplus exceeding $400 million — and perhaps much more.

The state is seeing increased revenues because individuals and corp...