Prime Minister Péter Magyar and Mayor Gergely Karácsony announced the measures after Thursday’s meeting of the Metropolitan Council for Public Developments, pledging closer cooperation between the state, the capital and its districts.

“Our job, among other things, is to manage the capital’s housing crisis, to make Budapest’s roads passable, and to make the city’s public transport sustainable and modern,” Magyar told a joint press conference.

Alongside the HUF 120 bln payment, the talks covered a significant reduction in Budapest’s solidarity tax to give the municipal budget a more predictable footing. Magyar said the city’s operations would also be reviewed to prevent its deficit from recurring and improve the use of public money.

Karácsony said Budapest would withdraw the lawsuits it had brought against the previous government over the size of the solidarity tax.

“The era of the central government treating the capital of the country as an enemy is over,” the mayor said.

The agreement envisages integrating transport services across Budapest and its surrounding area, with the state and the capital each covering half of the required public funding.

Transport and Investment Minister Dávid Vitézy said the Budapest transport center, BKK, was expected to require HUF 340 bln in budgetary funding next year, in addition to ticket revenue, as its responsibilities expanded. The state and the capital would each contribute HUF 170 bln.

Vitézy said the figure was substantially higher than current funding because it would also cover HÉV suburban railways, MÁV trains and Volánbusz services in the region.

“We will put the transport of Budapest and its surroundings on new foundations through more unified organization, coordinated services, and a predictable financing of 50 percent from the state and 50 percent from the city,” Magyar said.

The government also plans to submit amendments to local government and road traffic legislation to establish a unified metropolitan parking system.

Under the proposal, Budapest would operate paid parking and collect the fees wherever charges apply in the capital. Revenue would be earmarked exclusively for road renewal under the Metropolitan Road Renewal Program.

Vitézy said responsibility would rest with the elected Metropolitan Assembly, which would oversee parking operations and decide on road improvements. He argued that the current system was inefficient, noting that one district opposing the changes was operating its parking service at a loss.

Centralizing the task at the metropolitan level would also reduce the burden on district authorities, he said.

The council agreed to restart the Student City, or Diákváros, development based on the earlier design competition. Vitézy said the government and the capital would cooperate to allow the project to begin as soon as possible.

The Rákosrendező development would proceed through a joint organizational structure, drawing on the design competition concluded in early April. Further details will be discussed at subsequent council meetings.

The council also decided to propose returning the Metropolitan Sewage Works to public ownership and restoring full management rights to the capital.

Finance Minister András Kármán will appoint a budget supervisor to monitor Budapest’s finances continuously, Vitézy said.

“This does not mean that the capital’s sovereign, autonomous decision-making powers will be curtailed in any way,” he said, adding that the supervisor’s role would be to gain insight into financial processes and monitor them.

Vitézy said the arrangement had been agreed by all parties to build mutual trust. If liquidity problems arose, the government and the capital would have the same information available when seeking a solution.

The council is expected to reconvene in the coming weeks. Magyar said its work would also address the municipal budget, transport investment, issues concerning the Danube, public baths and broader cooperation between the state and the city.

Karácsony said Budapest sought “fair” cooperation with the government, while acknowledging that disagreements were likely.

“There indeed will be debates,” Magyar responded.