Victorian state government coffers are predicted to grow sharply on the back of revenue growth from payroll tax, stamp duty and higher GST grants. The budget numbers are due to be handed down on 28 April and projected to deliver $9.2 billion of surpluses over the next 4 years. While one should be cautious over government projections on budget surpluses (who can forget Wayne Swan’s “four budget surpluses that I deliver tonight” speech), the numbers bode well for investors in Victorian state government bonds. A stronger balance sheet usually means less default risk and narrower spreads to Federal Government bonds.