Hunter MPs, local councils and business leaders slammed the news the $25 million Royalties for Rejuvenation fund won't be fattened-up, despite the extra $810 million in coal royalties that will flow into the state's coffers this year.

The region is still pumping record amounts of coal, but the clock is ticking following the announcement BHP would shutter its Mt Arthur operation near Muswellbrook by 2030.

"It just feels like a slap in the face for the Muswellbrook community," Muswellbrook mayor Steve Reynolds said.

"We have been the working engine keeping the economy going during COVID.

"We've got projects we can deliver to make this transition easier but we just need this funding.

"It shouldn't be a matter of us needing to ask.

"An increase to the fund should just be a given with the current coal prices and what our region is facing over the next few years."

Cr Reynolds said he expected more for the Upper Hunter, given the royalties fund was initially meant to be "delivered directly to the areas most impacted".

"Instead it seems to be opening up to a range of organisations as more of a grants scheme to be taken advantage of," he said.

Places like Germany have earmarked 220 billion euros ($220 billion) to fund industrial transformation between now and 2026, with a focus on developing hydrogen technology, climate protection and expanding its vehicle charging network.

Closer to home, the WA government has announced it will shut its last coal-fired station before the end of the decade, spending an extra $547.4 million on top of the $115 million it already pledged to shift coal workers into new industries in the Collie region.

Cessnock MP Clayton Barr said NSW's $25 million commitment paled in comparison and was nowhere near enough to genuinely transition communities like Muswellbrook.

"You can't just transform the culture and the values of a community with one little $200,000 grant, you actually have to get in with them and stick with them for at least one, two or three generations to shift that and it's not going to be cheap," he said.

"We can either get the funds through the resources we are digging out of the ground or wait for the taxpayer to pick up the tab later down the track, rather than the companies making mega-profits."

The state budget revealed a $5 million spend to establish a protoyping and manufacturing facility for hydrogen energy storage in the Hunter.

Mr Barr said it was a drop in the bucket for what will be a complex and expensive transition.

"I think that amount for hydrogen is simply a gesture of saying we want to be in the conversation but not the frontrunner, not the bigger player and not really drive it forward," he said.

"It's like having a toe in the water and saying you've been for a swim."

Upper Hunter Nationals MP Dave Layzell maintained local mining communities "shouldn't be living in fear" with major planning applications in the system for extensions of mines to continue the industry on in the next few years.

"The price is through the roof and it's looking positive going forward into the future," he said.

"I don't think you can judge looking backwards ... we have plenty of time left in our coal industry, there's a big global export market and that's looking promising for at least the next 30 years, so is now the right time to start planning? Yes it is."

He said the state government is open to new technologies, but that hydrogen opportunities will largely be driven by private industry.

There weren't any new announcements in the budget to help the Muswellbrook or Singleton communities economically diversify.

The communities did receive $19.8 million and $265 million over four years in continued funding for the Singleton and Muswellbrook bypasses respectively.

But Singleton mayor Sue Moore called the Royalties for Rejuvenation fund "tokenism" and a "massive disappointment" compared to what then-deputy premier John Barilaro initially planned for the Hunter.

"Originally my understanding was that the fund would focus on the Upper Hunter. That extended to the rest of the region which is fine because this is a whole Hunter problem," Cr Moore said.

"But now it seems to be spread across the state with no understanding yet about how it's going to work.

"It has really been watered down from what it originally was."

She said planning for what happens after Mt Arthur's closure needs to start now, and Cr Reynolds said the budget lacked focus on unlocking the potential of mine buffer zones.

"While it's mostly a policy issue, we would have liked to see money set aside for a strategic task force or something to show the government is looking at the issue," Cr Reynolds said.

The budget also outlined close to $2 billion for the roll out of transmission infrastructure and acceleration of Renewable Energy Zones, a $105 million investment in the Renewable Manufacturing Fund and $45.9 million to expand the Pumped Hydro grants program.

While the Hunter isn't specifically mentioned in this funding, Mr Layzell said "projects will benefit from these initiatives based on merit".

"I want to see projects [in the Hunter] that may qualify so they can be highlighted to the NSW government for further consideration," he said.

"In regards to future post-mining land use, I plan to bring the parties involved together in the near future so we can find solutions to the existing planning requirements which are already proving an impediment to potential diversification of the Upper Hunter economy."

A NSW Treasury spokesperson said planning for those projects and programs is underway, and further announcements would be made on locations in the coming months.

The Herald's questions to NSW Treasurer Matt Kean were not answered on Wednesday.

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