The Centre for International Economics has also questioned the justification of the light rail project on jobs, saying capital works spending must be justified on the merits of the infrastructure, not merely on how many jobs it will create.

Capital works spending to create jobs was only "suitable" if it created jobs in sectors that had excess workers, to stop spending leaking interstate, but in Canberra job losses were among public servants, not in the construction sector, it said.

The government expects tram construction to employ an average of 500 people.

In an analysis of the budget for the Assembly's estimates committee, the economists point to the big increase in rates, with rates making up 16 per cent of ACT tax revenue in 2010-11 and 28 per cent now. Rates increased $12.3 million in the period, out-pacing the drop in stamp duty and insurance taxes, down $9.8 million.

Canberrans' cost of living would also take a hit from a big increase in the fire and emergency levy - from $130 per property now, to about $316 by 2018-19, plus hikes in parking and car registration.

The government has forecast a $408 million deficit in 2015-16, improving to a surplus of $50 million by 2018-19. But the centre says there is a significant risk it will take longer to reach surplus if economic growth is weaker than expected - and the budget growth projections look optimistic.

While Mr Barr blames the Mr Fluffy buyback for the deficit, the centre points to other factors as well, chiefly $124 million in new spending and a cut of $138 million in grants from the Commonwealth in 2015-16.

Taken over four years from 2014-15 to 2017-18, the territory's deficit is a combined $1.17 billion. The compares to a four-year total of $399 million forecast in the last budget. The big deterioration was due mainly to the Fluffy scheme, costing a net $466 million, and cuts to Commonwealth grants, totalling $406 million.

The report points to a major lack of clarity about spending on the Gungahlin tram, with insufficient information to make sense of what is to be spent and when. The budget allocates $1.5 billion for "sensitive" projects including the tram, new court buildings, a car park at the planned University of Canberra public hospital, and a convention centre. The spending is split between the three years starting July next year, but with no detail about how much would be spent on each project, nor timing. The $263 million earmarked for the current financial year on undisclosed projects had been deleted from the budget without explanation.

Nor it is clear, the analysis says, whether any of the $1.5 billion is to be spent on the tram, given the tram payments, including a $375 million lump sum, all fall outside the three years in which the $1.5 billion has been allocated. In addition, the tram is said to be funded from the sale of public housing and other buildings, plus some money from the Commonwealth asset recycling program.

The $1.5 billion fund appeared to be "being used as an accounting holding provision" for "yet undetermined capital projects".

The centre also points out that the asset recycling money had been pegged for spending on roads and accident black spots, but had been diverted to the tram.

As to the ACT's financial health, the centre said it should be judged on the credibility of the path back to surplus and the strength of the balance sheet. On the latter, the ACT was performing "reasonably well" to maintain its AAA credit rating and keep debt at comparable levels well short of other states and comparable to larger states. Net financial liabilities would peak at 15 per cent of gross state product in 2017-18, compared with 11 per cent in NSW and 14 per cent in Victoria.