The state Labor government has warned its restless public sector workforce that there will be no respite from financial "hard choices" as the budget surplus was slashed by $430 million on Thursday.

The budget update, published on Thursday, predicts a $618 million surplus this year, well down on the $1 billion projected when the budget was handed down in May.

The Treasury department says schools spending, drought relief, the flammable cladding crisis and dwindling GST revenue from Canberra have all had an impact on the bottom line.

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The cost of Labor’s “big build” infrastructure program has grown to $15.8 billion this financial year and is projected to be just under $14 billion, on average, in the four-year forward estimates period.