The NSW treasurer has revealed a $3.9 billion budget surplus and promised to use "the Holy Grail of numbers" to relieve cost-of-living pressures across the state.

Despite taking a big hit from reduced stamp duty revenue, the surplus for 2017/18 exceeded expectations by $600 million off the back of increased mining royalties and GST receipts.

Nine months out from the state election next March, Treasurer Dominic Perrottet on Tuesday promised the 2018/19 budget would help ease cost-of-living pressures for families while maintaining a record $87 billion infrastructure spend.

“Over the past 12 months, housing cooled more quickly than previously forecast,” the treasurer told NSW parliament.

“As a result, transfer duty revenues – 11 per cent of total revenue – will be $1 billion lower than we expected in last year’s budget and $5.5 billion lower in the three years to 2020/21.

“Despite this, our finances remain in excellent shape, because this government has laid foundations that are built to last.”

The treasurer’s message focused on the hip pocket but more than half of government expenditure is flowing to the transport portfolio next financial year including $4.3 billion for the Sydney Metro, the high-speed, driverless underground rail network system that’s under construction.

There’s a flagged $3 billion future “reservation” to begin the Metro West linking the CBD to Parramatta.

The controversial WestConnex motorway will receive $1.8 billion in 2018/19 while $258 million will kickstart the first stage of the Parramatta Light Rail.

In total, the coalition government will spend $51 billion on road and rail over the next four years.

Despite lacking any big ticket items for struggling families, the government has extended subsidies for three-year-olds attending preschool, saving parents an average $825 per year.

It has also cut certain parking fines and streamlined Service NSW which it says will help residents to find the best energy deals.

“This is a budget that puts people first, it builds for tomorrow and delivers for today,” Mr Perrottet told reporters.

Wage growth was stagnant at two per cent in 2017/18 and it is predicted to rise marginally to 2.5 per cent next financial year.

A $740 million upgrade to Liverpool Hospital headlines health spending with the government committing $8 billion over four years on upgrades and new facilities.

Some $17 billion will be spent on education in 2018/19 while $6 billion will be committed over four years to address a big increase in enrolments.

A sovereign wealth fund will also be created next year, starting with $3 billion, with 50 per cent of the interest generated each year going toward community projects.

To help pay for promises, government agencies will need to find an extra $1.6 billion in savings over four years, with the annual efficiency dividend to rise from two to three per cent.

By Tom Rabe