Governor Hochul and Mayor Mamdani unveil major $1.5 billion funding plan to stabilize New York City finances and protect essential public services

New York – In a move aimed at stabilizing the nation’s largest city during a period of financial strain, Kathy Hochul and Zohran Mamdani announced a major funding agreement that will channel an additional $1.5 billion from the state to support New York City’s operating budget over the next two years.

The plan comes at a time when city officials have been working to close a sizable budget gap while maintaining essential services. State leaders say the new funding package is designed not only to address immediate fiscal pressures but also to reinforce long-term cooperation between Albany and City Hall.

According to details released alongside the announcement, a significant portion of the funding — about $510 million in recurring annual support — will be directed toward costs that had gradually shifted from state responsibility to the city in previous years. Among the largest allocations is roughly $300 million designated for youth programming, an area officials say is critical for community stability and long-term public safety.

Another $150 million will come through the restoration of sales tax revenue that otherwise would have remained at the state level. Additionally, $60 million has been earmarked to strengthen public health services across the city. Officials noted that the remaining $500 million will be directed toward shared priorities that will be determined through ongoing discussions between state and city leaders.

State officials framed the agreement as an investment not only in municipal finances but also in broader statewide economic health. “A strong New York City means a stronger New York State. This investment protects services and puts the city on stable financial footing,” Governor Hochul said. “New Yorkers expect the state and the city to work together, and I’m proud to partner with the Mayor to deliver for working families.”

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City leaders echoed that message, emphasizing the need for cooperation after years of fiscal tension. Mayor Mamdani described the agreement as a step toward a more collaborative relationship between different levels of government.

“Working New Yorkers did not create this budget crisis and they should not be the ones to pay for it. After years of staggering fiscal mismanagement under the previous administration, our city deserves responsible and collaborative leadership. I am heartened by this budgetary progress and Governor Hochul’s partnership at this critical moment. This is what it looks like to begin a new, productive, and fair relationship between City Hall and Albany – focused on delivering for working New Yorkers.”

The funding announcement builds on a broader pattern of increased state support since Hochul took office. Her administration has already expanded aid to New York City in several areas, including a recent push to broaden access to universal child care programs.

Meanwhile, city officials have been taking steps internally to reduce financial pressures. In recent weeks, the mayor’s office reported narrowing the city’s projected budget gap to approximately $7 billion. That reduction was achieved through a combination of strategies, including tapping into existing reserves, implementing agency savings plans, and benefiting from stronger-than-anticipated revenue collections.

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Officials on both sides described the funding agreement as more than a one-time solution. Instead, they presented it as a sign of renewed cooperation intended to help restore fiscal balance while maintaining essential services for residents.

As negotiations continue over how the remaining funds will be allocated, leaders say the shared goal remains clear: stabilizing finances without placing additional burdens on working families. For policymakers in both Albany and the city, the agreement marks what they hope will be the beginning of a more coordinated approach to managing economic challenges in the years ahead.