Canberrans will be slugged with another $250 levy to prop up a public health system under "extraordinary pressure" and a budget deficit breaking the $1 billion barrier for the first time.
Surging hospital demand and costs of medical supplies meant "difficult decisions" needed to be taken to maintain the levels of service expected by the public, Treasurer Chris Steel said as he unveiled the ACT budget on Tuesday.
Alongside an increase in health spending, the budget included measures to accelerate new housing supply and modest cost-of-living relief, including a $50 increase to energy and water rebates for low-income households.
"It's a budget for better health care, a budget for more housing, more jobs, growing wages and supporting the most vulnerable people in our community," Mr Steel told reporters.
Despite a one-off $50 million increase in federal health payments, Commonwealth funding has failed to keep up with the rise in costs, he said.
As a result, federal funding was on track to provide just 33 per cent of the territory's public health needs in 2025/26, down from 37 per cent in 2024/25 and despite an agreed target of 42.5 per cent by 2030.
"Like other jurisdictions, our public health and hospital system is under extraordinary pressure, with high demand and growing costs. Our public hospitals are seeing more patients with more complex needs," Mr Steel said.
"That's why the budget delivers a record investment in our public health care system of $1.19 billion (over four years)."
The first-time treasurer said negotiating an increase in a new health funding agreement with federal counterparts would be an "area of intense focus", but revenue measures were needed to plug the shortfall.
"We have had to make difficult decisions in the budget to be able to continue to deliver the critical healthcare services that Canberrans rely on," he said.
The $250 per year health levy will be added to rates paid by residential, commercial and rural property owners and is expected to raise $205 million over four years.
Residential ratepayers are already charged levies to fund emergency and domestic violence services, on top of their general property rates.
Mr Steel also took aim at the federal government for backing a High Court case that ruled states and territories could not levy road user charges to make up for a shortfall in fuel excises caused by growing electric vehicle ownership.
Federal Treasurer Jim Chalmers said he would work with states and territories on a road user charging system that could form part of broader tax reform to take centre stage in a productivity roundtable in August.
The government vowed to tighten its belt, promising to shave $282 million over four years off unnecessary expenditure.
The ACT's $1.1 billion headline deficit in 2024/25 is $142 million - or 15 per cent - worse off than predicted just four months ago in the mid-year budget review, which had already uncovered a $347 million blowout from unprecedented health spending.
Net debt is expected to blow out to $11 billion next financial year.
The budget projected a cumulative $733 million downgrade to the net operating balance over the four years to 2027/28,.
The deficit is expected to ease to $425 million in 2025/26 and finally return to surplus in 2027/28, as easing inflation, lower interest rates and income tax cuts drive economic growth.
The territory economy is expected to grow by 3.25 per cent next financial year - one percentage point faster than the national economy.
The ACT has a population of just more than 475,500 people.
