The vote ended a period of strife between the mayor's office and council leaders, who wanted the city to spend more money on schools and after-school programs.
City Council President Bernard C. "Jack" Young credited Pugh for intervening in the negotiations and instructing her budget office to cut a deal with the council.
"Who won on this?" he asked. "We all won."
Pugh said she realized she had to put some of her signature initiatives on the chopping block in order to come up with the money the council sought. She authorized an $830,000 cut to her plan to add 6,000 new street lights and a $300,000 reduction to her proposal to place high-tech, trash-compacting garbage cans around the city.
"We took some hits in terms of the mayor's priorities," Pugh said. "We're willing to take a step back, so we can take 10 steps forward."
In doing so, Pugh committed to a three-year deal to spend more than $10 million more on the city's school system, and $2.4 million more next year for after-school and community school programs. She also agreed to restore $1.5 million in funding for Safe Streets, the anti-violence program that employs former offenders to intervene with younger criminals.
Young described the cuts as "minimal."
"You won't even notice it," he said. "You won't even feel it."
Other cuts include more than $500,000 from a fund that gives money to city agencies with innovative ideas, $800,000 from waste removal and recycling and more than $300,000 from a special events fund.
Environmental groups said they were pleased to see a deal that didn't make drastic cuts to anti-litter efforts. The council had proposed cutting more than $26 million from Pugh's budget last week as a negotiating tactic — a gambit that sparked some concerns.
"I'm relieved we're not where we were last week," said Julie Lawson, director of Trash Free Maryland. "Trash is a major concern to a lot of people. Not just as an impact on the environment but on quality of life. People who come out to a filthy block say it makes their lives harder. Investing in that public work is critical."
Carl Simon, interim director of Blue Water Baltimore, agreed the cuts were small compared to what had been proposed.
"Generally speaking, we were encouraged to see the City Council work with the mayor in finding a balanced and responsible approach," Simon said. "We'll always pressure for measures that reduce trash pollution. We hope in the future these will be a priority."
In addition to pumping millions more into schools, Pugh's first budget also increases money for police, while cutting some police programs. It grounds one of the agency's four Foxtrot helicopters.
Samirah Franklin, 19, leads the Baltimore Youth Organizing Project. She praised the deal to increase school funding.
"This is historic," she said. "Never before has the whole council been on the same side for the youth of Baltimore."
Young credited Franklin and her fellow youth advocates with helping bring about a deal.
"She made me feel like I couldn't stand up to them," he said.
In addition to a $25 million increase in schools funding, the budget also contains $12 million for a new voter-mandated youth fund.
Eric T. Costello, who chairs the council budget committee, said he was "happy we got a deal done."
"We got everything the council was looking for," he said. "The cuts were done in a responsible manner."
In securing more than $10 million in additional funding for city schools over the next three years, the council agreed they would not seek still more money for schools in the next two budgets, Costello said. The system this month laid off more than 100 employees, including some teachers, to close a $130 million budget gap.
Pugh said the deal was fiscally responsible.
"We provided for our young people and we maintained our fiduciary responsibility," she said. "Had we not saved money over the years, we probably would not have been able to rescue the school system."
But the mayor said the process that led to such acrimony has to change. She said the budget office will play a reduced role in future negotiations.
"I think it's important that the budget is driven by the mayor and the City Council and not by the budget department," she said. "That will change."
Baltimore Sun reporter Ian Duncan contributed to this article.