Tasmania will head into net debt for the first time in 15 years but the state's Liberal treasurer insists he has put together his proudest budget yet.
Peter Gutwein on Thursday handed down the 2019/20 budget, headlined by a $3.6 billion spend on infrastructure.
But a year after Mr Gutwein declared Tasmania on the cusp of a golden age, the island state will plunge into a net debt of $284 million next financial year.
That is forecast to balloon to $1.1 billion in 2022-23, about a sixth of the state's overall yearly expenditure.
But the 2019/20 budget has a modest surplus of $57.4 million, which is forecast to reach $250.6 million by 2022/23.
Mr Gutwein described the debt level as "manageable and modest".
"This is the budget I am most proud of. It will deliver not just for today, but for future generations of Tasmanians," he said.
"We have pulled the lever on further infrastructure ... rather than changing down a gear, we changed up a gear. We make no apologies for building stuff."
More than $1.6 billion has been allocated for roads and bridges, including upgrades for a major highway east of Hobart.
Work on the Bridgewater Bridge across the River Derwent north of Hobart will begin next year.
Tasmania's bottom line has been hit by a $560 million writedown in GST and stamp duty revenue over the forward estimates.
The budget targets $450 million of savings via "efficiency dividends" in government departments, including cutting spending on travel and advertising.
The state's opposition slammed the budget as irresponsible.
"This is a white-knuckle budget that is even worse than feared and Tasmanians have been deceived by this treasurer and this government," Labor shadow treasurer Scott Bacon said.
The government will next year introduce a tax on online gambling of up to 15 per cent.
Tasmania, which has Australia's most ageing population, will get an $8.1 billion health spend over four years, including $132 million to open 100 new beds at the expanding Royal Hobart Hospital.
New schools and improvements to existing ones will be funded in an education and training spend of $7.1 billion over four years.
In a stressed housing market, the government has allocated almost $68 million to boost the supply of new social and affordable homes.
Public sector superannuation liability continues to hit the state's bottom line at a cost of $303 million this coming financial year.
Amid lengthy union negotiations, the government has budgeted for a two-per-cent wage increase over three years for public sector workers.
This is despite the government currently having a wages offer of seven per cent over three years on the table.
TASMANIA BUDGET 2019/20 SNAPSHOT
Surplus: $57.4 million
Revenue: $6.41 billion
Expenditure: $6.35 billion
Net Debt (June 30, 2019): $284.5 million
GST Revenue: $416 million
Unemployment: 6.14 per cent
Growth: 2.75 per cent
Source: 2019/20 Tasmanian budget papers
Australian Associated Press