"It's the economy, stupid."

Bill Clinton's offsider first coined the phrase. And it's been appropriated by any number of politicians whenever they want to argue their election credentials.

While New South Wales Treasurer Dominic Perrottet never actually uttered the words yesterday as he handed down the 2018/19 state budget, they were lurking behind that big cheesy grin, their meaning embedded in every reference to the state's finances.

NSW is swimming in cash. It has so much, the Government doesn't know quite what to do with it all. But as the Treasurer splashed it in every direction yesterday, it appeared more out of desperation, a realisation that a healthy set of numbers may not be enough to get the Government across the line.

On paper, NSW is the powerhouse of the Australian economy; budget surpluses out to the horizon and no debt. The problem is, that power isn't filtering down to the masses.

Wage growth remains the weakest on record, Sydney housing prices are the country's most expensive and the price of basic utilities, particularly electricity, has been soaring.

Selling off state assets not magic formula

While the Government isn't entirely to blame for hyper power price rises, its policy of "asset recycling" — flogging off state-owned assets for as much as possible to invest in new infrastructure — isn't the magic formula the government makes it out to be.

Commercial entities who fork out enormous amounts on toll roads, ports, land title registries or poles and wires, need a commercial return on their investment. When those assets are monopoly businesses, it's consumers who cop it in the neck.

Hence the Treasurer's bold initiative to introduce a Toll Relief Program and an Energy Affordability Package. Taxpayers now are subsidising the private entities that bought the assets in the first place.

It isn't as though NSW can't afford it. The NSW balance sheet is in rude good health. This year, it's on track to reap a $3.94 billion surplus. While that's forecast to slip to $1.43 billon next financial year, surpluses are expected for the next four years.

Forecasts are little more than guesses. And the biggest guess is around real estate. For the past six years Sydney property has led the madness that has gripped a nation traditionally obsessed by real estate with prices in some areas doubling from already inflated levels.

Falling house prices could puncture NSW budget

Call it a coincidence, but just as Mr Perrottet was delivering his second straight miracle budget, the Australian Bureau of Statistics confirmed what we already feared. Sydney property was down 1.2 per cent for the quarter, clocking up the first annual fall in six years.

Two major banks, Macquarie and ANZ, now predict a Sydney real estate correction of about 10 per cent.

Such an event could punch a major hole in Mr Perrottet's plans. Stamp duty from real estate transactions account for a quarter of all NSW tax revenues. At $8.67 billion, it's already down by $1 billion from last year after the government gave out first home buyer exemptions.

It's forecast to drop another billion next year, reflecting the price drops and possibly a reluctance of sellers to take a lower price.

Volume drops affect the state's tax take far more than price drops. But the Government estimates an uptick the year after next with strong revenue growth from then on.

Unfortunately, while business was offered an olive branch in the form of a staggered reduction in payroll tax, homebuyers were left wanting. The bracket creep that has driven a huge lift in stamp duty revenue was left intact.

Time and again, Mr Perrottet stressed the importance of infrastructure. It's not just Sydney, Newcastle and Wollongong that have seen their resources stretched. The lack of infrastructure investment has become a national imperative.

Unlike his federal counterpart, Scott Morrison, who blithely ignored the role of population growth and immigration when delivering the federal budget last month, Mr Perrottet's document details the impact of immigration and the challenge this has created for the states.

Rapid lifts in population boost demand and economic growth. The downside is that without huge investment, standards in education, health, transport and housing begin to slip.

That hits productivity and living standards. That makes citizens feel poorer. That's where NSW finds itself.

It's not just the numbers.