A dramatic fall in the number of house and apartments sales has already lead to a write-down of more than $600 million in stamp duty revenue this financial year and Treasurer Tim Pallas has warned the government will "have to make hard choices".

Victorian government workers needed to adjust their wage demands, Mr Pallas said on Tuesday, with very few state assets left to sell and more revenue write-downs possible.

Last May's state budget indicated that stamp duty contributes nearly 30 per cent of the government’s $24 billion tax take.

The State Opposition said Victoria’s public servants would now face the consequences of Labor’s “reckless” spending, with Liberal leader Michael O'Brien accusing the Premier of spending money like water.

Public sector unions are reportedly unhappy that a 2 per cent pay rise has been proposed by the state government for tens of thousands of police, health workers and public servants, saying such an offer would fall short of cost-of-living increases.

Treasury’s forecasts made in last May's state budget, of nearly 4 per cent growth in stamp duty income this financial year, have proved wildly optimistic.

Just seven months after the Budget, Treasury had revised its estimates down to a decline of 6.8 per cent in the face of the property sales slump.

The state government earned $2 billion in June 2018 selling its share of the Snowy Hydro scheme to the Commonwealth, with the money earmarked for school upgrades and regional projects.

The $9.7 billion earned from the 2016 sale of the Port of Melbourne has already been spent on the state's ambitious level-crossing removal program.

The government was returned to office in November promising a raft of huge – and expensive – infrastructure projects.

Among its promises were $5 billion for an airport rail link, $6 billion to remove 25 more level crossings across Melbourne and almost $16 billion for the North East Link toll road.

Those promises came on top of $38 billion being spent now on projects under construction.

The treasurer was still forecasting a balanced budget this year and vowed there would be no “austerity” – although he said generous pay rises for the state government’s workforce could be off the table.

“People do need to realise that the state’s revenue is being compromised, partly due to the adjustment that’s going on in the property market at the moment,” Mr Pallas said.

“We’ve more than met inflation standards [on public sector pay] over the previous four years but we need to recognise that if the circumstances do mean that the state has a limitation on its capacity, due to a falling away of revenue, then we do have to make hard choices."

“People’s expectations of in terms of wage outcomes have to be tempered to the time.”

At the last budget, the state’s payroll costs for public servants, police, nurses, firefighters and other employees were tipped to balloon by 11 per cent to more than $25 billion in 2018-2019 and to $26 billion the following year.

Mr Pallas also warned on Tuesday that there could be more bad news for the state’s bottom line as the housing market continued to cool.

“We’re sitting back watching the property market each weekend,” he said.

“I wouldn’t be surprised if write-offs continue, the market is very slow in terms of volume of activity, which is the thing the hurts most, when you’re not getting that churn-over in property activity.”

Victorian Trades Hall Secretary Luke Hilakari said public sector workers would not be happy with a 2 per cent pay rise.

"They just want a pay rise that keeps up with the cost of living," he said.

But the Opposition leader Michael O'Brien said public servants were likely to be victims of what he called bad economic management. “Daniel Andrews has been reckless with some of his spending," Mr O'Brien said.

"Public servants who work hard, who deserve a good pay rise and because Labor can't manage the budget properly, there's a real danger they'll miss out on a fair pay rise."