The Australian state with the largest deficit in the country is set to hand down its budget on Tuesday – just seven months out from an election.

The ruling Labor government, led by Premier Jacinta Allan, is barely ahead of One Nation or the Coalition in the latest polling.

But with the state’s daily interest bill forecast to hit $28.8m-per-day by 2029, and $60bn of pandemic-era fixed-rate loans maturing over the coming four years, Ms Allan and Treasurer Jaclyn Symes have an almighty balancing act with an election in November.

Research from nonpartisan think tank e61 Institute suggests there is little room for big ticket budget pledges.

“Victoria is not broke, but it is increasingly boxed in,” e61 chief executive Michael Brennan said in a report released Monday.

“The finances are weak, with limited room to manoeuvre. This isn’t the moment for the kind of pre-election spend-up we’d normally expect six months out from a poll.”

The analysis points to a squeeze in the public health system, as hospital costs per-patient have risen from the lowest on the east coast in 2017 to above the national average in 2025.

“Treasurer Symes has the unenviable task of maintaining a credible fiscal trajectory, repairing past fiscal damage, and dealing with the health and hospitals juggernaut, all while Victorians face another cost-of-living shock,” Mr Brennan said.

“Successive Victorian governments have promised fiscal restraint without delivering it. The situation now necessitates a real shift from past fiscal habits.”

Ahead of Tuesday’s budget, the government has announced $11.2m for families specifically struggling to put food on the table, and $76m (matched by Canberra) for more trains out the far western suburbs.

The government has also found $50m for planned surgeries for children, $5m for mental health support in bushfire-affected areas, and $102m to upgrade triple-0 call centre infrastructure.

There is an extra $256.4m earmarked for hospitals, a $13.7m boost for WorkSafe, and $43.4m for IVF. Fishing-inclined Victorians can look forward to $5m of fish being dropped into waterways.

The state’s investment in film production will also be almost-doubled, with an extra $27m.

These pre-budget announcements are set against a host of cheap pandemic-era loans set kick onto variable rates in the coming few years, and the state’s debt projected to hit $192.6bn by 2029.

The Treasurer will also present the budget to parliament about one hour before the Reserve Bank, in all likelihood, hikes interest rates for the third consecutive time.

While Labor did not run a candidate in the Nepean by-election on Saturday, Liberal Anthony Marsh retained the seat for his party, raking in 38.5 per cent of first preferences, ahead of One Nation’s candidate on 24.7 per cent.

After One Nation’s preferences were divvied out, the Liberal candidate polled 63.5 per cent, beating a local independent.

Roy Morgan polling, taken between April 22 and 24, has Victoria heading for a hung parliament.

The polling puts Labor at 25.5 per cent, One Nation on 24.5 per cent, and the Liberal-National Coalition on 24 per cent.

Stripping out first preferences for the Greens, independents and minor parties has Labor claiming 44.5 per cent of the vote, and the Coalition and One Nation splitting the rest.

Modelling of just Labor versus the Coalition is neck-and-neck.

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