A booming Melbourne property market and a surprise windfall has Victoria expecting a budget surplus above $1.5 billion.
The 2015-16 mid-year financial report shows the state as being $940 million in the black, before a court judgment awarded the state $540 million from gambling firm Tatts Group.
State final demand had grown to 4.6 per cent in December 2015, up from 2.4 per cent the year before.
"Our economy is improving and improving quickly," Treasurer Tim Pallas told reporters on Friday.
Treasury has the surplus at $1.5 billion but it is expected to be higher at the end of June.
Victoria was handed $1.5 billion for the dumped East West Link toll road, and the federal government originally demanded that money back.
"The issue is resolved, the Commonwealth have made their position clear, the money will remain in Victoria for Victorian projects," Mr Pallas said.
Victoria pulled in $31.9 billion in revenue in the last six months of 2015, up 8.2 per cent on the corresponding period in 2014.
Total expenses for the last six months of last year were $30.7 billion.
Stamp duty worth $509 million drove a significant portion of the extra revenue.
Shadow treasurer Michael O'Brien said the Tatts judgment and the property market was propping up the budget.
"Debt is up by $408 million with the debt figure now standing at $22.7 billion. This is $1.5 billion more than when Labor came to office," Mr O'Brien said.
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