Gov. Kathy Hochul (D-NY) is sending another $4 billion to New York City to help close its budget gap as requested by Mayor Zohran Mamdani.
The announcement, made by both leaders on Tuesday, brings the total gap-closing aid to $8 billion over the next two years.
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Nearly $2.3 billion of the granted funding comes from New York’s measure to save money by restructuring pension payments.
The mayor has floated a plan to delay payments to the city’s municipal pension funds to help close the multibillion-dollar budget gap. It’s estimated to save at least $1 billion in the upcoming fiscal year, according to the New York Times.
The state funding also includes $500 million in revenue expected from Hochul’s new pied-a-terre tax proposal, which affects owners of luxury second homes in New York City.
The mayor has lobbied the governor and state lawmakers to consider increasing taxes on households and corporations. If his demands were not met, Mamdani vowed to impose a 9.5% property tax hike to close the projected budget deficit. Following Tuesday’s announcement, he is reportedly expected to scrap the plan for a higher property tax.
Hochul and Mamdani say the money will help support their shared vision for universal childcare, education, public safety, and infrastructure.
“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 press release. “This is what a results-driven, responsible partnership looks like and I’m proud to work with Mayor Mamdani to deliver for working New Yorkers.”
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Since taking office, Mamdani has blamed his predecessor, Eric Adams, for the $12 billion budget deficit the new administration inherited. The estimated deficit covers the next two fiscal years. For the upcoming year, the city faces a budget gap of more than $5 billion.
“For years, the relationship between City Hall and Albany has been defined by dysfunction and infighting,” Mamdani said in the release. “Governor Hochul and I, however, share a belief that government works best when we work together on behalf of the people we serve. We have partnered through every step of this process to protect the fiscal health of our city. I am thankful for her collaboration and deep commitment to securing a future for our city that working people can afford.”
