Mamdani And City Council Reach $126b Budget Deal That Dilutes Promises On Rental Aid

NEW YORK — Mayor Zohran Mamdani reached an 11th-hour deal Tuesday with the New York City Council on a $125.8 billion municipal budget that waters down a promised expansion of a rental assistance program — a reversal that speaks to the city’s difficult fiscal climate.

The diluted expansion of the program for low-income residents runs counter to a campaign promise Mamdani made as a mayoral candidate last year.

The budget deal — Mamdani’s first as mayor — also reverses his initial plan to increase the NYPD headcount, a proposal his allies criticized him for, and expands the city’s public transit discount program, which the mayor said brings him closer to making good on his pledge to deliver fare-free bus service.

The agreement on the 2027 fiscal year budget was formalized Tuesday morning with a handshake at City Hall between Mamdani and Council Speaker Julie Menin. The ceremonial gesture came just 15 hours before the budget is legally due — an unusually late deal. The Council is expected to pass the financial plan into law before the midnight deadline.

“Above all else, this budget offers a roadmap for the years to come,” Mamdani said in the City Hall Rotunda after the handshake with Menin. “This is only the first budget of our administration. Many more will follow, and every budget that follows will build on the principles established here: Honest budgeting, fiscal discipline, transparent government and an unwavering belief that working people deserve a City Hall that delivers for them every single day.”

The late agreement underscores the fraught nature of this year’s city budget negotiations.

After promising sweeping big government investments as a mayoral candidate last year, Mamdani scaled back many of his costly proposals upon taking office, a reversal he claimed was necessary because of a multibillion-dollar municipal deficit. That fiscal hole, which Mamdani has blamed on his predecessor, former Mayor Eric Adams, drove the current mayor to focus on belt-tightening across the municipal bureaucracy, especially after he only partially succeeded in his push to secure state-level tax hikes on millionaires and corporations.

Given his campaign promises and his affiliation with the Democratic Socialists of America, Mamdani’s embrace of fiscal responsibility as a priority has come off to many as counterintuitive. And he’s faced pushback from his allies, including progressive members of the City Council, for pointing to that posture in defending why he can’t — at least for now — make good on several of his big-ticket promises.

That dynamic became especially evident in the fight over the rental assistance program, known as the City Fighting Homelessness and Eviction Prevention Supplement, or CityFHEPS. The program subsidizes rent for low-income New Yorkers, and funding for it became the main sticking point in the final days of negotiations between Mamdani and the Council.

As a mayoral candidate, Mamdani promised to clear the way for 2023 Council legislation that would vastly expand eligibility for the program — a measure Adams refused to implement. But upon becoming mayor, Mamdani changed course, saying the expansion would be far too costly to enact amid the city’s deep deficit.

In Tuesday’s budget deal, Mamdani and the Council reached a compromise: Instead of expanding the existing initiative, the city will launch a new voucher program with a $175 million budget for the upcoming fiscal year. Only $125 million of that allocation will continue as recurring funding for years beyond that.

That’s a markedly smaller investment than what was envisioned under the 2023 Council legislation Mamdani promised to implement. According to estimates, that expansion would have required roughly $1 billion at minimum in additional annual funding.

It’s also less than what the Council pushed for in negotiations. Just last week, Menin said the Council was willing to settle for $300 million in additional annual funding, though advocates had pressed for at least $500 million.

And while the new program does increase the income level for eligibility as promised under the 2023 legislation, the structure of the new program reflects a downsized investment.

Under the 2023 Council legislation, low-income New Yorkers living in private apartments would have become eligible for the vouchers if they received an eviction notice from their landlords, a provision that supporters saw as a critical step toward preventing homelessness. Under Tuesday’s deal, though, only New Yorkers living in rent-stabilized apartments will be eligible for the vouchers if they are in active eviction court proceedings.

A City Council member involved in the budget negotiations told POLITICO the new funding levels aren’t sufficient to actually cover all the residents in the new eligibility pool. Rather, the program will be “capped,” meaning newly-eligible New Yorkers will only be able to access vouchers until the funding runs out, according to the member, who was granted anonymity to discuss the sensitive issue.

Christine Quinn, a former City Council speaker who runs WIN, the city’s largest shelter provider for families, said Tuesday’s deal on vouchers is “a very good step in the right direction.” But she made clear her group will continue to push for the city to expand the program further in next year’s budget.

“Obviously our advocacy is not done both funding-wise and structurally,” said Quinn, who has been a prominent advocate for the 2023 legislation and a sharp critic of Mamdani’s reluctance to implement it.

Any further voucher program expansions will be complicated by massive outyear budget deficits already projected by Mamdani’s administration. Last month, the administration projected a $7.1 billion gap for the 2028 fiscal year alone. His administration did not immediately disclose an update on that estimated gap Tuesday.

City Comptroller Mark Levine pointed to the outyear gaps as one of the most pressing issues for the mayor, noting that his administration needed an infusion of $6.1 billion in state aid just to close the upcoming fiscal year’s deficit.

“This agreement gets the city through an exceptionally difficult year, but it does not resolve the structural challenges ahead,” he said. “With large out-year gaps, limited reserves and significant economic uncertainty, next year’s budget could be even more difficult.”

On the NYPD headcount issue, Mamdani came under intense fire from allies, including the city chapter of the DSA, when he came out in early June in support of NYPD Commissioner Jessica Tisch’s plan to grow the force by 580 officers. Though the proposal broke his campaign promise to keep police headcount flat, he said the move was necessary to ensure proper training and staffing.

At Tuesday’s press conference, Mamdani said he and Tisch “‘were able to identify ways” to keep the headcount flat “while also meeting all of our crime-fighting needs and implementing the new programs that were announced earlier this year.” He didn’t elaborate.

The new budget also expands the city’s “Fair Fares” transit discount program by making an additional 340,000 low-income New Yorkers eligible for the initiative, which gives beneficiaries half-price subway and bus rides. The deal reached between Mamdani’s administration and the Council does not include a proposal pushed by Menin to automatically enroll income-eligible New Yorkers in the program, though. And it remains a far cry from Mamdani’s campaign pledge to eliminate fares altogether on city buses — a proposal he’s made scant progress on since taking office six months ago.

On another high-profile spending front, Tuesday’s budget deal secures $31.7 million in recurring annual funding for the city’s public libraries, which often have to fight every year to maintain their relatively small share of city funding. While that reverses cuts enacted under the Adams administration, it still doesn’t make good on Mamdani’s campaign promise to spend 0.5 percent of the city’s total budget on libraries.

At the City Hall press conference, Mamdani said the budget illustrates how socialists like himself “understand economics just as well as the capitalists.”

When asked if she agreed with that sentiment, Menin demurred.

“I don’t think that there’s an ideological way to pick up the trash,” Menin, a more moderate Democrat than Mamdani, told reporters. “This is about making sure that we’re delivering for New Yorkers.”

Leah Clark contributed to this article.