VICTORIAN motorists will be slugged with more expensive licence renewal fees as part of $750 million in revenue raising measures announced in the mid-year budget update.
The state is expected to be $137 million in the black at the end of June next year, which is $18 million less than the surplus forecast in May.
Premier Ted Baillieu said $1 billion in revenue had been wiped from the state's bottom line since this year's budget.
The black hole is partly due to $285 million less in expected stamp duty revenue.
The revenue raising measures include an increase in driver's licence renewal fees by $20 for a three-year permit and $70 for a 10-year licence.
To receive the $7000 first home owner grant, first home buyers will have to live in the property for a minimum of 12 months, instead of just six months.
Government departments will also have to trim spending to meet a two per cent efficiency dividend from January 1, 2014.
Mr Baillieu pointed the finger at the Gillard government 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 will 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."
As part of the revenue scramble, the coalition will reallocate some government aged care places to private providers in Melbourne.
The government also intends to gradually reform managed disability accommodation and transfer some of the functions of statutory authority Sustainability Victoria to the Department of Sustainability and Environment.
Shadow Treasurer Tim Holding said the government was reducing services to families and was formulating a plan to increase taxes.
He said the treasurer had regular updates on stamp duty revenue and should have told the public about the revenue shortfall earlier.
"Victorians are entitled to ask how did the government not see this coming," Mr Holding told reporters.
He said the treasurer had not ruled out further public sector job cuts.
"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."
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 future."
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