Local Fiscal Effects of Illegal Immigration: Report of a Workshop (1996)

The recent level of illegal immigration to the United States has increased debates about the effect of these immigrants on the cost of public services, and states have begun to enact policies that limit the public services available to illegal immigrants. The central issues are how many illegal immigrants reside in particular local areas and states and their effect on public expenditures and revenues and the economy in general. In 1994 California approved Proposition 187, which denies funding to illegal immigrants and their children for basic public services.¹ Seven states (Arizona, California, Florida, Illinois, New Jersey, New York, and Texas) have requested federal reimbursement for the costs of illegal immigrants.

Empirical studies through 1991 on the impact of immigration on government budgets were reviewed by Rothman and Espenshade (1992), but several important studies have been published since then. For the workshop, six studies were selected for analysis. The six case studies focused on one specific aspect of the complex question of the demographic, economic, and social effects of immigration: the net public services costs of illegal immigrants to selected geographical regions. These analyses are concerned primarily with two types of estimates: the number of illegal immigrants and the per capita costs of public services.

For their review of the case studies, the participants were asked to keep the following questions in mind:

1. What key questions was the study addressing?

2. What important questions were not raised in the study or were inadequately answered?

3. Available case studies are usually based on current budget effects. Is this an appropriate approach as opposed to, for instance, a life-cycle framework?

4. Is it appropriate to include infrastructure capital costs when estimating the fiscal effects of public services? If so, how should the costs be included?

5. Is it appropriate to include costs for the use of quasi-public infrastructure, such as roads, which typically have low marginal costs, when estimating fiscal effects?

6. Case studies usually present point estimates for illegal immigration and for associated costs per immigrant: What is known about the range of estimates and the desirability of taking alternative estimates into account?

7. Available case studies limit fiscal impacts to revenues and costs within the state or local area: Is it important to include revenues and costs for the federal government and to take intragovernmental transfers into account?

8. What assumptions underlying the methodology for each study?

In addition to these specific questions about the case studies, several broad research questions were posed by workshop participants to guide thinking about the conceptual basis for the case studies. Workshop discussion did not answer these questions, but suggested that further thinking was required in order to provide a better common basis for reviewing case studies. First, what public program costs and government expenditures should be considered in studies of the costs of illegal immigrants? The costs of providing services varies across cities and states, even for some national programs. Second, how should variations in individual use of programs be included in the analysis? Many studies assume a common usage pattern for residents, although the costs of services varies in relation to such factors as poverty, presence of school-age children, and health status. Third, to what extent does illegal immigration affect costs and revenues for local and state governments? If illegal immigrants were not residents of an area, what costs and revenues would change? Some costs may be direct, such as an illegal immigrant in jail; some are secondary, such as an illegal immigrant who brings a legal immigrant child, who enrolls in school. Fourth, what is the appropriate time perspective for viewing the fiscal effects of illegal immigration? Although available case studies use current-year data, there are situations for which the time perspective should be the long-run effects of immigration. A related fifth question is whether fiscal analysis studies should include static comparisons (over an annual budget) and longitudinal comparisons (over a lifetime).

This report summarizes the workshop presentations and discussions. The first section describes the six case studies reviewed by workshop participants. The next section provides summaries of the discussions on selected state and local fiscal effects, including those on education, health care, incarceration and criminal justice, and revenues. The last section presents participants' suggestions of priorities for research and data collection.