A flood of tax revenue from the property boom and employment growth has delivered a budget windfall to the Andrews government.
A final tally of the state's finances reveals the budget was in surplus by $2.7 billion last financial year.
That was $776 million more than predicted, and a massive $1.45 billion increase on the result for the previous year.
The result confirms the Andrews government – and to some extent the state opposition – will be able to plunder a large war chest for road, rail, health, education and law and order announcements ahead of the 2018 state election.
Melbourne's property boom underpinned the revenue surge. During the year, the State Revenue Office collected $5.84 billion in stamp duty, a whopping $901 million more than the previous year.
Strong employment and economic growth also played a big part.
During the year, state final demand – a measure of total spending and investment that is often used as a proxy for economic growth – increased by 4 per cent in real terms.
It was the strongest result in the nation, and the best since 2007-08.
During the year, the government collected about $5.4 billion in payroll taxes, $230 million more than in 2014-15.
Taxes on vehicles, mostly registration fees and vehicle stamp duty, leapt by $118 million to $1.6 billion, while gambling tax collections grew by $53 million to $1.83 billion.
Treasurer Tim Pallas said population growth had been a big driver for the property sector.
"Victoria's population is now more than six million people, and our labour market has also been one of the strongest in the country," he said.
During the year, net debt was equivalent to 5.9 per cent of the state economy, but this is expected to fall sharply in the 2016-17 financial after factoring in the $9.7 billion windfall from the Port of Melbourne lease.
But the report also revealed the budget benefit from a High Court decision to overturn an initially successful court challenge by Tatts over changes to its gambling licenses, adding an extra $541 million to the bottom line during the year.
Mr Pallas has previously said the government plans to maintain net debt at about 6 per cent of the state economy over a decade, freeing up billions of dollars for infrastructure investment.
The government already has a big major projects agenda, including the Western Distributor toll road, upgrades to the Tullamarine and Monash freeways, the Metro Rail Project and the level crossing removal program.
Infrastructure Victoria has also placed the North East Link road proposal, connecting the Western Ring Road at Greensborough to the Eastern Freeway or EastLink, on the political agenda, suggesting it should be built relatively quickly.