NSW schools and hospitals are also slated for major upgrades in a 2026/27 budget aimed at delivering more essential services in rocky economic times.
Treasurer Daniel Mookhey foresees another deficit of $2.3 billion the coming year before a slender, $1.1 billion surplus in 2027/28, according to the state budget handed down on Tuesday.
NSW is the only state still running operating deficits eight years after the pandemic.
But Mr Mookhey said the focus of his fourth budget was on NSW families paying off mortgages and spending more on the groceries, fuel and other bills.
"They are the people who this budget is for," he told state parliament.
"And they are the people who this budget is about."
With the war in the Middle East pushing up fuel prices, the treasurer said he wanted to make it easier for motorists with a $561 million transport package.
Vehicle registration costs, which can run to more than $1500, will be slashed by $100.
The reduction is complemented by a one-year reduction in the weekly toll cap, from $60 to $50.
But the measure won't prevent two-way tolling on Sydney's Harbour Bridge being introduced for drivers in the near future.
About one million motorists will benefit from the reduction in their maximum toll spend after Labor campaigned heavily in 2023 on the scale of the charges, branding Sydney "the most tolled city in the world".
With floods ravaging major arteries and regional routes in recent years, $911 million will be poured into restoring local and state roads.
The treasurer still wants to keep a tight grip on the purse strings going into the March election while touting a "relief and reform" mantra through "responsible and difficult decisions", although the opposition has said its approach is too timid.
Rather than a cash splash on massive projects, Mr Mookhey said the budget was focused on immediate concerns for overlooked regions and urban centres.
Planned spending includes an eye-watering $22.2 billion towards the health portfolio, making it the largest single commitment in the 2026 budget.
This will be split into a $10.3 billion bucket in recurrent funding, including recruiting 9000 more health workers and delivering historic pay rises to nurses and midwives.
A record $11.9 billion in infrastructure spending is earmarked to build and upgrade 32 hospitals in regional NSW and western Sydney, including Liverpool in southwest Sydney and the Shellharbour region.
Some 260 schools will be built or upgraded under a $9.2 billion education infrastructure program.
Another $2.1 billion will be spent on maintaining Sydney's massive train network to curb delays and a further $6.5 billion will be spent over 10 years to deliver thousands of new electric buses.
In a period of high electricity prices, Labor is also spending $557 million on an energy efficiency program for low- to middle-income families.
The government is investing an additional $184.1 million in funding for domestic and family violence programs to keep more women and children safe.
The police force will be bolstered with an Australian-first specialist armed response command replete with riot squad vehicles and 250 officers, costing $94.3 million.
Mr Mookhey spruiked a $1.1 billion special kitty for contingencies, including the bailout of Rio Tinto's Tomago aluminium smelter and the federal gun buy-back scheme introduced after the Bondi terrorist attack.
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