The agreement comes ahead of Mamdani’s release of his fiscal year 2027 executive budget and brings total new state assistance to the city to nearly $8 billion over two years, according to the governor’s office and City Hall. The package is not all direct cash aid from Albany. It includes state funding, revenue measures, and actions to delay, restructure, or reduce the city’s fiscal obligations.
Some of the support had already been announced, including $500 million from a new pied-à-terre tax on luxury second homes – the details of which have yet to be finalized. The package also includes $202 million in actions to offset recurring spending obligations, $150 million in additional school aid, and more than $3.1 billion in state-authorized savings measures.
Those savings include $2.294 billion from pension restructuring, $508 million from class-size flexibility, and $361 million from other actions, according to an official familiar with the plan.
The deal marks a significant shift from the preliminary budget Mamdani released in February, when the administration said it could be forced to raise property taxes by 9.5% and use reserves if it did not receive additional help from Albany. That preliminary budget projected a $5.4 billion remaining two-year gap after earlier savings, revenue adjustments, and state support — down from the deficit of more than $12 billion that Mamdani said he inherited from the Adams administration.
“From day one, I have been committed to ensuring New York City succeeds, because a strong and stable City means an even stronger New York State,” Hochul said in a statement. “Today, we are fulfilling the promise to make free universal child care a reality, making significant investments in education, public safety, and infrastructure while providing the city the resources they need to continue to fund critical services for New Yorkers.”
Mamdani said the agreement reflected a more cooperative relationship between City Hall and Albany.
“For years, the relationship between City Hall and Albany has been defined by dysfunction and infighting,” Mamdani said. “Governor Hochul and I, however, share a belief that government works best when we work together on behalf of the people we serve.”
City Council Speaker Julie Menin and Council Member Linda Lee, who chairs the Council’s Finance Committee, said they had a productive meeting with Mamdani on the executive budget and credited the administration with moving toward an approach “that identifies savings and avoids raising property taxes or raiding reserves.”
The Council — which, in its own budget, found a way to close the deficit without tax increases — will review the executive budget and hold oversight hearings in the coming weeks, Menin and Lee said. They said affordability, public transit access and city services will be among the Council’s priorities.
Mamdani will officially unveil his executive budget later this afternoon. Check amNY.com later for updates.