Victoria's major projects agenda has been scaled back in favour of upfront cash for schools, hospitals and services in a first budget aiming to deliver election promises and consolidating Labor's election win.

In a pitch to families setting the battlelines for the four-year political cycle, Treasurer Tim Pallas has promised to "improve the lives of Victorians" in Australia's fastest-growing state.

Spending increases over the next four years will be cranked up to 3 per cent annually from 2.5 per cent previously to the meet the demands of booming population growth and cost-of-living pressures.

The budget includes $3.9 billion for students, schools, TAFES and early childhood development, with $325 million to refurbish and rebuild 67 schools and $111 million to build 10 new schools.

The health system will get a $2.1 billion boost, with four suburban hospitals to be upgraded and a new 237-bed Western Women's and Children's Hospital.

The government has also set aside $2 billion to $2.4 billion to upgrade 20 level crossings this term, although only 17 have been identified, and only four have been fully funded.

The removals are to be scrapped by the sale of the Port of Melbourne, which was not detailed in the budget. Mr Pallas said legislation to sell the major asset would be introduced to the parliament in spring.

The government also set aside $1.5 billion to begin work on the Metro Rail Project, with $840 million of the money to be spent in 2018-19.

But investment in infrastructure has been scaled back, with up to $22 billion of new projects on the books, compared with $27 billion announced by the Napthine government in its final budget.

Mr Pallas said the government was genuine about delivering its election commitments, with the state's largest ever education budget and record funding for public transport.

"This budget delivers on 96 per cent of the commitments that the government made to the people of Victoria at the last election," Mr Pallas said.

But key questions remain unanswered. Although the government ramped up education spending to meet Victoria's obligations under the Gonski school funding agreement over the coming three years, the final two years of the agreement remain under a cloud.

Despite a promise to begin work on the $400 to $600 million Mernda Rail extension this term, so far just $9 million has been allocated for planning work.

The first tech schools, a key election promise, will not be opened for at least two years, with $12 million allocated for the planning.

Public sector wages are expected to leap 7.1 per cent this year, due in part to staff growth and new wage deals.

Several major public sector pay negotiations are due this year and public sector unions have been buoyed by the success of the ambulance union in securing major pay rises.

Shadow treasurer Michael O'Brien said the budget was designed for "Daniel Andrews' union mates".

But Mr Pallas said his government's approach would be broadly similar to the Coalition in limiting increases to 2.5 to 3 per cent.

The opposition savaged the budget as "visionless" and failing to outline an infrastructure agenda to meet population growth. Coalition leader Matthew Guy said Darwin, with a population of 200,000, had more shovel-ready projects than Victoria.

He said the Metro rail project and the removal of 50 level crossings was "under-funded".

"We have seen this government heavily playing politics with the upgrade of schools," Mr Guy said. "Very, very few of them are in regional Victoria, even fewer of them in seats not held by Labor members.

"This is politics first and people second."

The budget complains that Victoria's share of federal infrastructure will drop to 13 per cent if the Abbott government withdraws funding previously allocated for the East West Link.

And it is also remains unclear what will happen to the money already allocated for the East West Link from the federal government. The budget says scrapping the project has freed up $7 billion that is "now available to fund other more critical priorities".

With a focus on local investment in schools and health, Labor hopes the budget will set them up for re-election in 2018. Senior strategists say they do not want to make the mistake of the previous Coalition government, which "did nothing" in its first years and already Labor has emailed its members urging them to keep the campaign momentum going.

In his first budget Mr Pallas delivers surpluses over the forward estimates, beginning at $1.2 billion next year and building to $1.8 billion in 2018-19.

The state's revenue will grow by $2 billion, to $55.2 billion.

Homebuyers have helped grow the state's revenue, up to more than $5 billion; general tax is forecast to grow at more than 4 per cent over the next four years.

Dividend revenue has boomed, with the state to take $433 million from the TAC next year and $1.4 billion over the forward estimates.

Overall dividends are up 11.6 per cent.

Treasury forecasts net debt to gross state product to peak at 5.8 per cent this year, before dropping to 4.4 per cent in 2018-19.

Unemployment is forecast to drop slowly from 6.25 per cent to 5.75 per cent in four years.