NSW budget forecast revised down A DROP in payroll tax revenue and challenging national and global economic circumstances have contributed to a worsening financial outlook for NSW. Releasing the half-yearly budget review on Thursday, Treasurer Mike Baird revealed the budget across the forward estimates to 2016/17 was expected to worsen by about $1.2 billion. This financial year the budget is tipped to be $656 million weaker than was forecast. While the budget is still on track for a surplus in 2016/17, this year will see a deficit of $2.5 billion. This compared to a $1.9 billion deficit projected at budget time. The figures are based on a new accounting standard, which incorporates changes in the way employee superannuation is treated. Mr Baird said revenue growth remained well below long-run averages. "In 2013/14 payroll tax is forecast to be $166 million lower than expected as a result of a softening of the national labour market," he said. He told a Committee for Economic Development Australia event that while the housing sector was a shining light, the weakness in payroll tax was starting to have an impact. "Over the budget estimates, yes stamp duty is up, but it is pretty much offset by the payroll (drop)," Mr Baird told reporters after the event. The payroll weakness was due to two factors - weaker wages growth and the weaker employment rate, he said. The state government had forecast a 20 per cent growth in stamp duty but the actual increase has been 23 to 24 per cent. Mr Baird wouldn't rule out anything - including tax hikes - to bring the budget back to surplus. "We have made decisions in relation to expenses before and we will do it again," he said. We are determined to get back to a sustainable position which is a $1 billion surplus on an ongoing basis. I am not going to get into a discussion about what we may or may not do. We will do whatever actions are necessary.