Funding for Destination NSW will drop from $176.7 million in 2018/19 to $141.1 million in 2019/20, budget papers revealed on Tuesday.

Tourism Minister Stuart Ayres did not address the cut in a statement on the budget, saying only that the government worked hard last year to ensure NSW remained top of the list for visitors.

"Not only do we stage the events the other states want but we develop our own big, bright ideas like Vivid Sydney which is the largest festival of its kind in the southern hemisphere with 2.25 million visitors who spent $173 million in 2018," he said.

Tourism and Transport Forum chief executive Margy Osmond said she understood the need for NSW to tighten its belt amid falling revenue but cutting tourism was a false economy.

"It's disheartening and short-sighted that NSW's tourism industry which is the envy of the other states has had to bear some of the burden of the necessary fiscal restraint," she said in a statement.

"While the numbers and yield continue to grow NSW can't afford to be complacent or take its foot off the gas otherwise the state risks falling behind competitors and losing the mantle of Australia's number one tourism state."

The NSW budget surplus is expected to fall to $802 million in this financial year, after the largest revenue write-downs in the state's history.

But the government is expected to continue delivering surpluses averaging $1.7 billion over the next four years despite a record $93 billion infrastructure spend.

Australian Associated Press