First Deputy Mayor Dean Fuleihan expressed optimism on Thursday about the potential for increased state funding to help address the city’s looming $5.4 billion budget shortfall.

The mayor has been advocating for Governor Hochul to implement tax increases on affluent New Yorkers and large corporations. He argues that New York City deserves a more equitable share of state resources and additional financial support from the state.

“This is part of the ongoing discussions we are having in Albany, which I believe are progressing successfully,” Fuleihan remarked during a breakfast event at New York Law School.

According to Fuleihan, state grants currently account for 16% of the city’s upcoming budget, with federal grants comprising 6%. “We are hopeful that the state’s contribution will exceed 16%,” he added.

Mayor Mamdani has attributed the city’s over $5 billion budget gap to financial mismanagement under former Mayor Adams.

State legislators are anticipated to reveal their nonbinding budget resolutions next week, which are expected to feature proposed tax hikes, as initially reported by Politico.

Mamdani has threatened to raise city property tax rates — the only tax hike he can approve as mayor — if the governor does not step in to help the city balance its budget and fund his affordability-centric agenda items like universal childcare.

“This is not a frustrated face. I’m not frustrated. I know how to do this,” Hochul said in response to a question on whether she was ticked off by Mamdani’s ultimatum.

Hochul has stood firm against tax hikes on the wealthy, though she’s signaled some openness to raising the corporate tax rate.

Speaking at an East Harlem press conference with Mamdani, the governor pointed out that the state Legislature has every year put forward tax increases on the rich. She also emphasized that she’s committed to sending the city billions for child care and to help the city close its budget gap.

“I think the moral of the story, and the lesson to take away is that there’s never been this level of cooperation, because I am also invested in the success of the city,” Hochul said. “I don’t think governors usually speak like that.”

State Senate Majority Leader Andrea Stewart-Cousins said Wednesday that the upper chamber would be including the hikes on the wealthiest New Yorkers and top corporate tax rate.

“We are certainly trying to meet the moment,” she said, “and revenue raisers would certainly be part of our package.”

“We will make our case and I’m sure the governor will make her case, as will the mayor and everyone else,” Stewart-Cousins told reporters. “That’s what this is about.”