Victoria's debt is expected to balloon by $29.7 billion over the next four years, as the state government continues to borrow cash to fund major infrastructure projects.
It comes after the state's debt burden jumped 26.4 per cent, or by $13.1 billion, in 2018/19 to $62.9 billion.
The Victorian Auditor-General made the forecast in its annual assessment of the state's financial position.
But it insists the debt remains serviceable and Victoria continues to be financially "well positioned".
"The government's use of borrowings for major projects is an important source of finance, particularly in a low interest rate environment," the auditor-general report released on Wednesday states.
The Melbourne airport rail, West Gate Tunnel, Metro Tunnel and level crossing removals are among big projects the borrowed money is going towards.
More broadly, the state government spent more than it raked in during the last financial year, with revenue of $78.6 billion and costs of $80 billion.
Taking into account other ways the government lost money - such as devaluation of assets and liabilities - the state had a net loss of $9.1 billion in the year.
Victorian Treasurer Tim Pallas said the report confirmed the state's "solid financial position", and the capacity of its infrastructure agenda to underpin demand in the economy.
The government has also been ramping up services, such as those in hospitals and schools, to handle its growing population.
"Victoria is not immune from the economic pressures felt across the world - but despite weaker national and international conditions, our economy remains strong," Mr Pallas said.
Public servant expenses continue to be the state's biggest operating expense, which at $26.6 billion have increased by 40 per cent between 2013/14 and 2018/19.
The workforce grew from 217,000 to 263,000 in that time.
The public service has been expanding faster than the population, with the sector growing by 21.1 per cent since 2014/15 compared to population growth of 11.9 per cent.
The auditor-general has also acknowledged that it doesn't have a comprehensive or consistent way to measure how productive the workforce is being.
"Therefore, we cannot readily discern how much of the growth in the workforce is due to increases in the quantity and/or quantity of the goods and services being delivered, or the result of workplace inefficiency."
It noted if the public service continues to grow it will put pressure on the state's operating position.
"These expenses are difficult to reduce without reducing either the level or standard of service."
Australian Associated Press
