Victorian drivers will pay more for licences as the state government claws back $750 million in revenue, and the premier has accused Prime Minister Julia Gillard of budget sabotage.
Delivering a slim $137 million surplus forecast for 2012/13, Premier Ted Baillieu said $1 billion had been wiped from the state's bottom line since this year's budget, largely due to a weak property market.
Estimated stamp duty revenue has been revised down by an average of $293 million a year over the next four years.
Vehicle taxes are also predicted to be $40 million less than forecast in the May budget.
Victorians will pay for the revenue downgrade with more expensive driver's licence fees and a tightening of eligibility for the $7000 first home owner grant.
Three-year driver's licence fees will be $20 more expensive from April next year and 10-year permits will be $70 higher.
To qualify for the $7000 first home owner grant, buyers will have to live in the property for a minimum of 12 months, instead of just six months.
The government is expecting to raise $75 million by selling off state-funded aged care places to private providers in Melbourne.
Government departments will be expected to trim $290 million in spending through a two per cent efficiency dividend to start from January 1, 2014.
Treasurer Kim Wells did not rule out further public sector job cuts on top of the 4200 already announced.
He said the current voluntary redundancy program was ahead of schedule, with 2300 already accepted.
Mr Wells said the states were facing sharp revenue falls but he did not support raising the rate of the GST or broadening its base.
Mr Baillieu said the federal government was to blame for a significant part of the state's revenue woes.
He said the commonwealth had announced major policies such as the National Disability Insurance Scheme and the Gonski education reforms that would deliver a nasty blow to the states' finances.
"It is a real problem, it's a real challenge," he told reporters.
"You can't have all of these noble initiatives without having revenue streams to be able to pay for them.
"There are time bombs being planted into the forward estimates of the commonwealth budget and state budgets and they are being planted by the commonwealth."
Shadow treasurer Tim Holding said the government was reducing services to families and was formulating a plan to increase taxes.
"The government is clearly hatching a secret plan to dramatically increase the tax burden on Victorian families and it's always someone else's fault," he told reporters.
Community and Public Sector Union Victorian secretary Karen Batt said the government was rehashing the Kennett era strategy of privatising services.
"They say it won't affect services but believe me it will," she told reporters.
"It will have a direct impact on the ability of this state to provide for our aged parents into the future."
Opposition aged care spokeswoman Jenny Mikakos said once aged care beds moved to the private sector there was no guarantee services would be available to families across Victoria.
"Once the beds get sold there is no guarantee that these private providers will keep the same number of beds open in any particular location," she told AAP.
A spokeswoman for Mr Davis said the government was committed to being involved in residential aged care but needed to respond to changing service patterns and demand.
"The increase in care provided at home through support packages means some reduction in demand for low care beds," she said.
"Changes in service patterns will reflect demand and population changes."