Mayor Zohran Mamdani, City Council Speaker Julie Menin and the rest of the council reached an agreement last week on a nearly $126 billion budget for the 2027 fiscal year, coming in just under the wire of their statutory July 1 deadline.
In the end, many of Mamdani’s headier threats — to significantly raise property taxes and raid some of the city’s reserves to plug looming budget holes — did not come to pass, as nobody had really expected him to take these unpopular steps. They were threats intended to extract concessions such as a high-earner tax increase from Gov. Kathy Hochul, and while that also didn’t happen, the city got some significant fiscal commitments from Albany.
As for the negotiations at City Hall, the main sticking point on the budget had been the expansion of the CityFHEPS housing voucher program – our local version of something like the federal Section 8 housing program. CityFHEPS is similarly intended to subsidize rental costs for lower-income New Yorkers. I encourage you to read our earlier coverage for more detail, but it’s been a subject of dispute since the council approved the expansion in 2023 and then-Mayor Eric Adams refused to implement it, saying it cost too much. The council sued, and that litigation continued into Mamdani’s mayoralty after he pivoted away from a campaign promise and continued fighting the expansion.
The deal ultimately drops that litigation in exchange for Mamdani agreeing to a new law that will rejigger how the city’s housing vouchers work. It’s complicated, so let me break it down into parts. The new deal is still an expansion of the voucher program, but not as significant an expansion as was contemplated by the council’s 2023 law. One of the main changes is that CityFHEPS’ replacement would now apply to tenants with household incomes of up to 50% of area median income, or AMI. Since the current AMI is $152,700 for a three-person family, that represents a real boost from the previous income cutoff of 200% of the federal poverty level, which is now $27,320 for a similar-sized family. In other words, a family of three previously needed to have an income below $54,640 but now can qualify with an income of up to $76,350. But eligibility extends only to tenants of rent-stabilized units, not those with market-rate rents.
Under the budget deal, the vouchers will be available to people living in shelters run by agencies other than just the Department of Homeless Services, which had been a significant omission in the program’s prior structure. This deal then lets the council achieve some of the primary objectives of the earlier expansion — namely raising income thresholds and thereby preventing people from being evicted in the first place, and getting people out of more-expensive-per-night shelters and into permanent housing — without quite ballooning the program costs to eye-watering levels.
CityFHEPS itself is getting taken out of the Department of Social Services and reconstituted in its expanded form in the Department of Housing Preservation and Development. More crucially, this agreement also changes CityFHEPS from an entitlement – meaning a benefit guaranteed to all who qualify – to an annually budgeted program that only has a certain amount of money to spend. That might seem a little like inside baseball, but in practice the step limits one of the main fiscal concerns about the vouchers, which was that eligibility could conceivably keep expanding, requiring ever-greater expenditures for the city. This deal provides some additional $300 million for the voucher program over the next two fiscal years, adding to about $1.8 billion projected in fiscal year 2026. That’s nothing to scoff at, but is at least a fixed cost that won’t balloon wildly to the $12.6 billion that the Citizens Budget Commission projected it could cost to run the program from 2026 to 2030.
There were some other significant changes that came out of the negotiations between Mamdani and the council. Fair Fares, the program to provide discounted transit for lower-income New Yorkers, also got a bump, receiving an extra $54 million and getting an eligibility expansion to 200% of the federal poverty line, compared with 150% before – a win for the council, though it was less than what some there had wanted. There are also several education-related add-ons, including things that had been dropped from Mamdani’s earlier executive budget proposal, such as programs to provide mental health services in schools and an increase to $1,000 for public school kindergartners to receive for eventual college costs.
Many of the more notable aspects of the budget were what it left out. The most controversial of these was the axing of a proposed headcount increase of 580 officers for the NYPD in Mamdani’s preliminary proposed budget. That figure represents a small fraction of the 35,000 officers the force is budgeted for, but every new police officer position comes with long-term and often escalating costs, as union-mandated salary increases kick in and generous pensions accrue. The initial announcement of the increase was met with much hand-wringing from some of Mamdani’s base, who perceived it as an olive branch to a department that had viewed their incoming civilian leader with skepticism. I thought it would be an interesting test of whether Mamdani could avoid getting steamrolled by another NYPD expectation after he’d already controversially kept NYPD Commissioner Jessica Tisch on from the Adams tenure; in the end, both he and Tisch announced that they had determined that this would not affect public safety, which feels like a win for Mamdani, albeit a small one, especially since Menin had been for the increase.
On the other side of the coin, the budget did not include any notable investments in mental health services, including B-HEARD emergency clinician teams and the city’s mobile crisis program, despite a number of recent high-profile incidents in which people in mental health crises ended up arrested or shot by the police. And in what has almost become a tradition for mayors, Mamdani also settled for less funding for parks and libraries than he had promised earlier on, as the new budget fell short of his earlier commitment to devoting 1% of spending to parks and 0.5% to libraries.
Despite all that, it remains the largest city budget on record (which is admittedly the case for almost every budget) and the deal served as a pointed rejection of the notion that the city’s fiscal troubles should be addressed via austerity. While the expansions weren’t all that everyone wanted, there are no notable cuts to services, and Mamdani seems committed to continuing a vision of a municipal government willing to spend to improve lives but also determined to control runaway costs, as was demonstrated by his collision with the council, in which he trimmed their plans to expand housing vouchers.
And some of the money is going not to flashy new programs, but to staffing and modernizing city agencies so they can better do what they’re already doing; the Department of Buildings, for example, is getting an additional $16 million for personnel costs around things like construction and enforcement, as well as some $14 million for supplies and contracts for inspections and other mandates (this precedes the buckling building fiasco of this week). These aren’t necessarily sexy investments, but they are building capacity for the city to actually be able to carry out Mamdani’s vision on housing and the rest of his program.
