Victoria's debt will more than double to $54.9 billion over the next five years as Daniel Andrews' re-elected Labor government borrows big to fund major transport builds.
Net debt is now sitting at $22.8 billion, growing to $39 billion in 2019/20 before swelling to $54.9 billion - or 10 per cent of gross state product (GSP) - by the end of the forward estimates.
Debt is predicted to rise to 12 per cent of GSP in subsequent years as the state funds the North East Link road, Melbourne Airport rail and the removal of an additional 25 level crossings by 2025.
"Despite a (property) stamp duty writedown of $5.2 billion, our average expenditure growth over the next four years remains lower than the average revenue growth - we're not spending more than we earn," Treasurer Tim Pallas told reporters on Monday.
The extra debt will mean taxpayers will be forking out billions of dollars in interest, but Premier Andrews has justified the cost.
"This is exactly what we said we would do at the election last year - borrow to build the infrastructure we need," he told Seven News after the budget was revealed.
There's a $1 billion surplus for 2019/20 followed by a cumulative $10.3 billion in surpluses through to 2022/23.
Mr Pallas said the property market was showing signs of recovery. But he would not plan on a worst-case scenario because "I'm not leading the market or the economy down".
Ratings agency Moody's said Victoria's growing debt was manageable within its triple-A credit rating, with the state's economy projected to grow at 2.75 per annum over the next four years.
S&P Global Ratings said the property downturn will put pressure on the state's operating margins and new taxes will only partially offset the gap, also highlighting that increasing employee costs will be a challenge.
The government says it's finding efficiencies in the public sector, which is going to experience employee costs ballooning from $26 billion in 2019/20 to $29.4 billion in 2022/23.
To rake in a little more cash, the government is targeting the top-end of town with tax hikes for foreign investors, luxury car owners and gold miners.
Mr Pallas defended the changes, saying taxes had to increased in a way that did not cause a substantial burden to the broader community.
"If you can buy a $200,000 Maserati I don't think you're going to be particularly fazed by a small increase in the motor vehicle duty," he said.
Shadow treasurer Louise Staley attacked the government for introducing new taxes, for being too optimistic about the property downturn and not keeping a lid on employee expenses.
"What we want them to do is manage their projects properly and to manage their public sector wages bill properly. Neither of which they have done," she told reporters.
In a budget dubbed "Delivering for all Victorians", Mr Andrews' government has set about doing just that. New announcements were few and far between in a fiscal plan dedicated to turning election promises into reality.
The government will continue its transport spend with $27.4 billion towards suburban infrastructure, a new hospital in Footscray and upgrades to others, and the introduction of kindergarten for three-year-olds.
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