A rainy-day budget will prepare NSW for looming economic storms as the state battles the challenges of inflation, rising unemployment and higher interest rates.
In his first budget, Treasurer Daniel Mookhey predicted a deficit of $7.8 billion in 2023/24 before the delivery of a modest surplus of $844 million in 2024/25.
The forecast came despite a big rise in spending on key items such as public-sector pay and new schools and hospitals.
But Mr Mookhey warned the surplus would depend on a lot going right and the Minns government would save rather than spend revenue increases to help the state deliver a soft landing.
"I'm certainly not going to suggest that the surplus is locked and loaded by any means," he said on Tuesday.
The government was determined not to spend every dollar that came into the state's coffers to prepare for unexpected shocks such as natural disasters, he said.
Instead, improving the budget was about hard work, careful decision making and "prudent principles".
But Opposition Leader Mark Speakman said the budget left many questions unanswered about the state's expenditure.
"It's one thing to say you're going to have a surplus and it's another to deliver a surplus," he said.
"We have grave doubts that there will be a surplus because this budget is based on dodgy assumptions."
Mr Speakman pointed to a lack of clarification about the cost of keeping coal-fired power station Eraring open, or how future wage increases would be funded.
Risks to the surplus highlighted in the budget papers include the lagging impact of higher interest rates, uncertainty over inflation and possible disasters driven by climate change.
In the short-term, targeted budget cost-of-living support will come in the form of energy rebates for mostly low-income households and concession card holders, as well as relief on healthcare costs.
More than 700,000 motorists will be assisted by a $60 weekly toll cap while first home buyers will save up to $30,735 through expansions to the assistance scheme.
But Mr Speakman said the vast majority of NSW families would be left disappointed because there was very little in new cost-of-living relief measures.
The biggest increases in budget spending will go towards the state's essential health and education services.
Hospital and health facilities will receive $13.8 billion in infrastructure spending over the next four years, while $2.5 billion extra will fund pay rises and additional staff.
Australian Medical Association NSW president Michael Bonning said the budget's health allocation would be quickly overtaken by inflation, with spending in 2023/24 up less than one per cent on the amount allocated in the previous year's budget.
"In comparison, the Queensland government this year increased its health budget by 9.6 per cent while NSW couldn't even commit to a one per cent increase," he said.
Nearly $10 billion will be allocated over the next four years for new and upgraded schools, TAFEs and public preschools and the budget will also fund permanent literacy and numeracy programs among other measures.
Labor said it had found $13 billion in savings and redirected funds, much of which will go towards delivering a 4.5 per cent pay rise for more than 400,000 public-sector workers.
The budget bottom line would also be improved with increased coal royalties, as well as the suspension of contributions to the NSW Generations Fund, the state's sovereign wealth fund.
Despite the changes, the state's net debt was still expected to swell to nearly $114 billion by 2026/27, while gross debt was forecast to reach almost $187 billion.
The annual interest bill on the debt was predicted to rise from $5.5 billion in the current financial year to nearly $7 billion in 2026/27.