Mayor Zohran Mamdani and City Council Speaker Julie Menin reached a $125.8 billion budget deal at the end of June that pours an extra $175 million into rental assistance, widens who can qualify for the city’s biggest housing voucher, and ends the lawsuit the city had been fighting to keep that voucher from growing. The agreement was first reported by The City, and the Council passed it hours later by a 45-6 vote.
The fight that nearly blew up the deadline was over CityFHEPS, the city-funded voucher that lets a household pay about a third of its income toward rent and covers the rest. Roughly 67,000 households rely on it to get out of shelters and into apartments. In 2023 the Council passed a law to make far more people eligible. Former Mayor Eric Adams never implemented it, the Legal Aid Society sued, and Mamdani, despite campaigning on expanding the program, kept the legal fight going after he took office. In March he appealed to the state’s highest court, arguing the Council had no authority to expand the voucher at all.
The budget deal reverses that. The administration agreed to drop the suit, and the city will build a new rental program, under a bill sponsored by Councilmember Pierina Sanchez, to reach New Yorkers who don’t currently qualify but are facing eviction. Going forward, CityFHEPS will apply to people at a higher income level, roughly $56,700 for an individual and $81,000 for a family of four, up from about $31,920 and $66,000. It will also cover people facing eviction from rent-stabilized apartments, and people in shelters the Department of Homeless Services doesn’t run, like runaway youth and those displaced by fires or vacate orders.
“This is a historic win for vulnerable New Yorkers, and a turning point in our city’s approach to homelessness,” Sanchez, who led the push for more voucher money in the budget, said in a statement. Christine Quinn, the former Council speaker who now runs the shelter and supportive housing provider WIN, said expanding the program “will help thousands more individuals and families leave shelter and move into permanent, stable housing, while making smart use of taxpayer dollars.” Robert Desir, a Legal Aid Society staff attorney, said the deal brings “needless litigation to a close.”
The mayor kept the legal fight going because of the program’s cost trajectory. CityFHEPS cost the city about $26 million in 2019. By 2025 it was almost $1.8 billion. That is before the expansion, which the Independent Budget Office estimates could push the program past $4 billion a year by 2030. The program keeps growing because it works at moving people out of shelters and there are very few exits, so costs pile up faster than people leave.
At the City Hall press conference, Mamdani framed the deal as proof of competence. “We have worked together to usher in a new era of fiscal health for our city,” he said. Menin called the agreement “transformative” and said she and the mayor “have come together in the spirit of collaboration with the shared interest of wanting what is best for our city, and that is the essence of this handshake.” It is the first budget the two have negotiated together, and it landed only after the state helped plug a deficit that had run north of $12 billion.
Fair Fares, which gives low-income riders half off MTA subway and bus trips, got $54 million more. Libraries got $31.7 million in more permanent funding. And Mamdani announced $34 million-plus next year to build a portal releasing city records on the air quality and health impacts of the September 11, 2001 attacks, documents previous administrations had refused to hand over.
The budget also drops a plan to hire 580 new police officers that had appeared in Mamdani’s earlier executive budget and drew protests from elected officials and the Democratic Socialists of America. Mamdani said he and Police Commissioner Jessica Tisch “were able to identify ways to keep the NYPD headcount of the originally authorized 35,000, while also meeting all of our crime-fighting needs, and implementing the new programs that were announced from here this year.”
Budget watchdogs were not impressed. Andrew Rein, president of the Citizens Budget Commission, said the mayor was “exactly right” that the city has a huge structural budget problem, then added: “Unfortunately, this budget fails to solve it.” In a separate analysis of the numbers, Rein and Comptroller Mark Levine flagged that the plan leans on roughly $8 billion in one-time revenue and a stretched-out pension payment schedule, which the commission says lowers city contributions by $11 billion through 2032 but then raises them by $15.6 billion over the following five years. The adopted budget is expected to forecast a 2028 deficit of more than $7 billion. “Groundhog day was a great movie, but it’s no way to manage a budget,” Rein said.
Mamdani has cast the whole thing as vindication, saying democratic socialists “not only understand economics just as well as the capitalists” but “can solve their years of mismanagement through an embrace of our principals.” The bill for the voucher expansion, and the out-year gaps, come due later.
Featured image: Credit: Michael Appleton/Mayoral Photography Office
