NSW Treasurer Matt Kean isn't lining up for a fight with councils but has committed to a controversial tax revamp to boost housing supply.
The government's half-year budget update banks on an amended special infrastructure contribution (SIC) passing the parliament this year and then raising an extra $924 million in three years.
The levy on developers would cover "growth-enabling" infrastructure projects to unlock new housing supply, the government says.
The reform was paused last year after councils kicked up a stink over the arrangement that could move funds to infrastructure far from housing developments.
Property developers raised concerns that without an exposure draft bill, questions remained over whether the money would be closely linked to increased housing supply.
"A budget paper is not equal to legislation," Urban Taskforce chief executive Tom Forrest told AAP.
"Urban Tasforce supports new (levy) provisions provided we can be certain that this will clearly result in additional housing approvals and more supply.
"But if there is no clear link to additional infrastructure or additional housing targets, then this proposal will meet with strong opposition."
The NSW Productivity Commission in 2020 said reforming the SIC could deliver up to $12 billion in benefits over 20 years, contributing to better services, lower house prices and savings for business.
Labor accused the government of mounting an "election eve heist" by putting the proposed levy in the budget papers.
"They are raiding the piggy bank of every local government in NSW to plug a massive black hole in their budget," shadow treasurer Daniel Mookhey said.
Mr Kean denied he was "declaring war on councils" on the eve of next month's election.
"This is government policy and what we've done is ensure that we implement the recommendations of the Productivity Commission," he told reporters on Wednesday.
"The Productivity Commission said this is the right policy for NSW.
"We're not going to apologise for investing in the infrastructure that will bring on new housing supply, because we want to support first-time buyers being able to get their foot in the door."
Mr Kean said the government's $344 million cashless pokies reform was not in the budget papers but had been accounted for, having been announced after the half-year review ended.
Savings to pay for another recent announcement - a power bill voucher scheme costing about $500 million - would be detailed as part of the budget process, he said.
Mr Kean said the government was "absolutely committed" to returning the budget to surplus in 2024/25.
The half-yearly review forecast the budget being $333 million in the black that year after a $6.5 billion deficit in 2023/24.
