NSW Treasurer Daniel Mookhey has highlighted a forecasted $12 billion revenue shortfall for the state over four years.

The shortfall is attributed to a redistribution of GST revenue, which is said to disadvantage NSW more than the financial impact of COVID-19.

Mookhey emphasizes prioritizing NSW families over maintaining the state's AAA credit rating in the face of certain downgrade risks.

The revenue loss is equivalent to the potential employment of thousands of healthcare workers, teachers, or police officers.

A credit rating downgrade from AAA would increase the cost of borrowing for NSW, which is currently rated AAA by both Moody's and Fitch.

The Treasurer is advocating for a GST distribution based on population share, supplemented by federal government support for smaller states.

NSW is postponing the finalization of crucial funding agreements with the federal government to ensure better terms, particularly for public hospitals and schools.