Feb 25, 2024 - Politics & Policy

Immigrant influx is squeezing city budgets

A photo of a line of migrants of differing ages, including children and adults, standing outside in winter clothing.

People recently arrived in the U.S. prepare to leave a Denver encampment on Jan. 3. Photo: Hyoung Chang/The Denver Post via Getty Images

The crisis resulting from a record-high number of people entering the U.S. through the southern border is increasingly straining budgets in some of the largest cities.

Why it matters: Mounting pressure on city coffers only exacerbates the demand on the federal government to support the municipalities that have largely been fronting the costs themselves.

The big picture: A recent analysis from S&P Global Ratings shows that of the 100,000 immigrants Texas has transported since 2022, 84% were sent to Denver, Chicago and New York.

  • People from all over the world are risking their lives to flee violence, persecution, poverty, a lack of access to medical care and more.

Zoom in: Denver — home to more immigrants per capita than any other U.S. city — has tapped into its 2024 savings and is pulling at least $5 million from its budget to continue providing services for them, with more reductions likely.

  • Cutbacks have meant reduced hours at DMVs and recreational centers, plus a pause in hiring of some city staff.
  • At the same time, Mayor Mike Johnston said he would begin decreasing the number of new arrivals served, though it's unclear by how many.

Reality check: A new first-of-its-kind federal study found that refugees and asylum seekers have historically had a net positive fiscal impact in the U.S.

  • The Department of Health and Human Services found that refugees and asylum seekers who entered the country between 2005 and 2019 generated nearly $124 billion in net federal, state and local government revenues — after taking into account the costs of caring for them.

What they're saying: Johnston called Denver's cuts "shared sacrifice" in early February.

  • "This is what good people do in hard situations as you try to manage a way to serve all of your values."

In Chicago, Mayor Brandon Johnson has allocated roughly $150 million for immigrants in his 2024 budget, but a recent agreement with state and county leaders demands another $70 million.

  • Johnson has still not allocated that money amid accusations from some Black constituents and leaders that the new arrivals are being prioritized over existing local communities.

New York has implemented cost-saving measures at its humanitarian relief centers and is renegotiating vendor contracts, per S&P's report.

  • In part thanks to those measures, the city dropped its cost estimates for sheltering new arrivals to $4.2 billion and $4.9 billion for fiscal years 2024 and 2025, respectively.

Zoom out: Other cities and states that have been hit less hard by the crisis are still crunched for resources.

  • Massachusetts has spent at least $360 million on sheltering, transportation and services in fiscal year 2024 as of Feb. 8. Officials estimate emergency shelters will cost nearly three times as much next fiscal year.
  • Washington, D.C. has spent more than $36.4 million.

What to watch: The escalating burden on city finances isn't expected to end anytime soon.

  • Local governments have continued to shoulder most of the responsibility as imminent immigration reform remains unlikely.

Axios Denver's Esteban Hernandez, Axios Boston's Steph Solis and Axios Chicago's Monica Eng contributed reporting.

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