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Queensland’s treasurer says he’s “not giving up” on halting a ratings downgrade for the state’s finances, after handing down a budget full of red ink, and predictions state borrowing will top $200bn in three years.

Treasurer, David Janetzki, promised a budget surplus in 2029-30, the year after the state’s next election, but only after years of billion-dollar deficits.

Handing down his second budget on Tuesday, Janetzki forecast relatively positive economic growth and a strong labour market despite volatility caused by the conflict in Iran – and billions more in coal royalties to the state, driven by a 6% rise in exports in 2026-27.

The state will earn $6.9bn in coal royalties that year alone, up from $4.79bn in 2025-26, according to the budget.

But despite a forecast recovery in coal prices, the state continues to teeter on the edge of a credit rating downgrade.

“Labor’s legacy left us highly likely, or even an air of an inevitability to getting a rating down grade, but I’m not giving up. We’re not giving up because we’re making the budget improvements while delivering what we promised,” Janetzki said, on Tuesday.

In February this year, rating agency S&P affirmed a negative outlook for Queensland government debt, warning of “large deficits”. It described the state’s budgetary performance as “weak”, but refrained from a credit downgrade, saying it expected a return to operating surplus in the 2028 fiscal year.

But Janetzki’s budget forecasts a $1.9bn net operating balance in 2028-29, state borrowings topping $202bn that year. There will be a $619m surplus the year after, he said.

Key budget measures include:

• Government revenue will increase 5.1% over the forward estimates, driven by increases in government duties, payroll tax and royalties.

• Spending will grow, rising from $100.8bn in 2025-26 to $111.6bn in 2029-30.

• But the government says it is committed to returning the budget to a “fiscally sustainable position through strong expenditure management”, with expense growth dropping from 4.9% in 2026-27 to an average of 2.6% over the four years to 2029-30.

• A half-a-billion dollar saving through better coordinating procurement, reducing the cap on senior executive positions and reduced spending on contractors and consultants.

• $119.2bn for new roads, bus projects and rail in the next four years, and other infrastructure.

• Population growth forecast to slow rapidly.

• The state’s 50 cent fare scheme will remain and be legislated.

Premier David Crisafulli said the government had fulfilled his promise of no new or increased taxes.

“We haven’t taken the easy road, haven’t found justifications to whack people with new taxes under the cover of global crises,” Crisafulli said, on Tuesday.

“We’re on your side, and we’re going to continue to drive down tax, not find new ways to tax you”.

Brisbane’s 2032 Olympics are another challenge for the state budget, though Crisafulli pointed out the state will spend more than twice as much on health infrastructure as it will on the games.

The government has yet to break down the budget for Queensland’s 17 Olympics venues beyond the global $7.1 figure for the games.

Crisafulli defended his decision not to reveal the cost of the projects.

“Queenslanders will get full visibility on every one of those projects. Right now, we’re arm wrestling and driving down contract prices,” he said.

“I’m very, very confident about the $7.1bn figure for the games venues”.

The LNP government was elected on a platform of cracking down on crime, particularly youth crime.

Queensland’s jails are now 135.5% full, down on last year’s 144.5%, due to the opening of the new 1500 bed Lockyer Correctional Centre last September.