NSW govt to fill federal funding gaps

The NSW government has pledged to fill some federal funding shortfalls, as Treasurer Andrew Constance warns of challenging years ahead.

Mr Constance on Tuesday announced as part of the NSW 2014/15 budget the state government will spend $220 million to retain patient services cut under the May federal budget.

A further $107 million will be spent to continue pensioner concessions that were also cut.

He urged the Abbott government to freeze its funding cuts to his state until it delivers its federation white paper.

"The commonwealth budget has impacted the state budget by some $2.2 billion over five year period," he said on Tuesday.

"We are able to absorb this challenge in the short term, but beyond the forward estimates - in particular as it relates to health - we have an enormous challenge ahead."

The federal government's decision to walk away from National Health reform agreement will hit the NSW budget beyond the 2018 forward estimates, he said.

The state government is also spending $230 million across all school sectors as part of the Gonski agreement.