(The Center Square) – New York City Mayor Zohran Mamdani has reached a tentative agreement with the City Council on a $125.8 billion budget propped up by hundreds of millions of dollars in state bailout funding.
The “handshake” agreement between Mamdani and Council Speaker Julie Menin, announced Tuesday, came just hours before a deadline to approve the spending package and after the two agreed to policy changes including expansion of the city’s housing voucher program and discounted bus service for low-income riders.
This agreement proves that fiscal responsibility and public excellence can go hand in hand,” Mamdani said in a statement. “We have worked together to usher in a new era of fiscal health for our city, one that is sustainable, one that is durable, and one that makes needed investments in a safer, more affordable New York.”
The mayor reiterated claims that the budget gaps were “inherited” from former Mayor Eric Adams and were “built on years of undercounting the true cost of running our city” but said his administration was able to craft a spending package without making deep cuts or raising taxes, which he had threatened to do to plug the budget gaps.
“We made a different choice. We balanced this budget without resorting to austerity,” the democratic socialist said. “We protected the services New Yorkers rely on, while restoring honesty to the City’s finances. We accelerated the affordability agenda by investing in housing, mental health services, parks, libraries, and students of all ages.”
A key provision of the spending bill includes a significant expansion of the Fair Fares program, which will offer half-priced subway, bus and paratransit trips to another 340,000 New Yorkers who will now be eligible to participate.
Under the plan, the city will pump another $54 million into the program, on top of $120.6 million previously allocated. Eligibility will increase to 200% of the federal poverty level, up from 150%, which will make 340,000 more residents eligible for half-price subway, bus, and paratransit fares. The move will increase the number of New Yorkers who get housing vouchers to 1.3 million.
Mamdani and Menin also agreed to an expansion of a rental assistance program called CityFHEPS, which currently provides housing vouchers to about 36,000 low-income households. The expansion will cost the city’s taxpayers about $175 million in the next fiscal year, according to Menin’s office.
The budget deal also settles a lawsuit challenging CityFHEPS reform laws passed by the Council and includes a plan to pass legislation that creates a housing voucher structure with expanded eligibility criteria and cost-containment controls.
Mamdani rolled out his preliminary $127 billion budget in January, calling for fulfilling a campaign pledge to raise taxes by 2% on millionaires and increase the combined corporate tax rate to just over 22% to reduce a budget deficit and foot the bill for his lefty agenda.
Ahead of the budget process, Mamadani threatened to raise property taxes across-the-board if Gov. Kathy Hochul and state lawmakers don’t approve his plan to increase taxes on New York City, wealthiest families, and businesses to plug the revenue gaps.
Hochul, who is seeking reelection this fall, rejected the plan, but agreed with legislative leaders to provide New York City with another $8 billion in state aid over the next two years, as well as $1.2 billion for expanded childcare assistance.
Legislative leaders also agreed to Hochul’s controversial plan to tax the second homes of wealthy New York City residents, which could drum up another $500 million a year in revenue for the city.
