Budapest is the capital of Budapest. The city was created in 1873, by the union of the cities of Buda, Pest and Óbuda ("Old Buda").
Until 2011, Budapest used this flag, incorporating the red-yellow of Buda and the blue-yellow of Pest:
The rationale for the change included the similarity with the flag of neighbor country Romania (for a brief period, the blue was replaced by green mostly by same reason) and the absence of Hungarian colors more visibly, what would give the impression that Budapest was independent of Hungary (yes, I also think this is a horrible argument).
The current flag is therefore very similar with many Hungarian nationwide flags (compare with naval ensign):
In my opinion, this flag is less interesting and meaningful than previous one, but you improve it to a next level. My first idea is a stylized banner of arms:
I think the banner of arms works there because the coat of arms has the same dynamics from pre-2011 flag: the top, one-towered castle represents Pest, while the bottom, triple-towered castle represent Buda, and the white stripe represents the Danube river separating both. It's Budapest in a nutshell! A bonus point for not remembering neither Romania nor any other country.
But, if one want to incorporate more Hungarian symbolism, you could made the flag red-white-green like national flag:
Another thought is making the Pest part blue and yellow again:
I don't think the last looks particularly Romanian, do you?
Comments and suggestions are welcome.
By the way, which one is your favorite?