NSW Treasurer Daniel Mookhey will deliver his fourth, and potentially last, budget on Tuesday ahead of the March 2027 election.
"We're determined to use Tuesday's budget to build a state working families can afford," he told reporters on Monday.
"We understand that people are under such pressure ... they expect us to provide help for today but to build for tomorrow."
Rising interest rates, a stalled property market and the fallout from the war in the Middle East have further slowed an already sluggish Australian economy.
The treasurer wants to keep a tight grip on the purse strings, touting the mantra of "relief and reform", but the opposition says it is too timid and vision is needed.
Rather than a cash splash on massive projects, Mr Mookhey said the budget focuses on "bread and butter" concerns from overlooked regions and urban centres.
Planned spending includes $10.3 billion in recurrent funding for a range of health services, a record $9.2 billion in infrastructure, $2.1 billion for maintenance of Sydney's massive train network and a $557 million energy efficiency program for low to middle income families.
About one million motorists will receive more relief to offset expensive tolls, an issue on which the Labor government heavily campaigned in 2023.
A one-year reduction in the toll cap from $60 to $50 and scrapping administration fees will provide "practical relief that people will actually notice in their weekly budgets," the treasurer said.
Mr Mookhey also confirmed on Monday that a bailout to save jobs at Rio Tinto's troubled Tomago aluminium smelter is on the books.
While the NSW economy was expected to grow by 2.5 per cent in the coming financial year, that forecast has been downgraded to a meagre one per cent.
NSW is the only state still running operating deficits eight years after the pandemic, and a slowing property market is endangering its already long road back to surplus, the e61 Institute says.
But the Sydney-based think-tank's chief executive Michael Brennan noted the state is arguably better positioned than others with its debt as a share of the economy considered modest.
NSW was due to rival Victoria as the most heavily indebted state, but the latest budget forecast has it stabilising at around $178.4 billion.
"With continued spending discipline, despite revenue write-downs and structural spending pressures, Tuesday's budget can still credibly chart a course back to relative fiscal health in the next two years," Mr Brennan said.
The state gets 10 per cent of its revenue from stamp duty receipts, which are projected to fall $5 billion in the coming four years, while land taxes are also expected to decline by about $3 billion.
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