National Immigration Forum

Practical Solutions for Immigrants and America

Blog & Updates

Immigration and the States: When You’re Broke, Fix It

July 21, 2009 - Posted by Douglas Rivlin


Photo by Kerri 2009

The National Governor’s Association (NGA) annual summer meeting in Biloxi, Mississippi puts a new exclamation point on the dire financial times afflicting the economy and all levels of government.  With California $26 billion in the red and many other states facing a fiscal crisis of record proportions, half of member governors decided to forgo the NGA’s meeting altogether.


On immigration, the talk in Washington is about a looming comprehensive immigration reform debate to reduce or eliminate illegal immigration, restore the rule of law, and set a rational immigration policy at the federal level (where it belongs) moving forward.  But, almost all of what is actually being done these days makes fiscal problems worse for the country and worse for the states. 


Specifically, Washington is coming up with new ways to:


  1. Drive down tax revenues at all levels of government by driving taxpayers who are currently on-the-books and paying their fair share of taxes into the untaxed underground economy;

  2. Expand unfunded mandates to states by shifting immigration enforcement costs from the federal to the state and local level;

  3. Waste ever greater sums of tax money on ineffective or counter-productive immigration control measures;

  4. Forgo the revenues that could be reaped by a legal, orderly, and fully taxed national immigration policy.


Drive Down Tax Revenues

The Senate recently voted to extend the use of a federal employment database called E-Verify to a broader swath of the economy.  Meanwhile, the Department of Homeland Security has stepped up the use of “I-9 audits” to reexamine the authenticity employer’s work authorization documents for their employees.


The goal of each of these efforts is to detect and terminate the employment of immigrants who are in the country illegally but who are working on company payrolls and having their full-share of taxes deducted from every pay-check.  Supporters of such enforcement measures assure us that lacking employment, undocumented immigrants will promptly deport themselves and this moves us towards their goal of removing 12,000,000 undocumented men, women, and children from the country. 


The reality is that almost all of these current taxpayers will convert themselves to off-the-books workers in America’s untaxed underground economy.  Evaluating a previous proposal to extend E-Verify throughout the U.S. economy, for example, the non-partisan Congressional Budget Office (CBO), found that such a measure would decrease federal tax revenues by $17.3 billion over a nine year period as work moved from on-the-books to off-the-books.


Expanding Unfunded Mandates

In the name of limiting driver’s license access to immigrants, including undocumented immigrants, Congress has previously legislated that states revamp how they issue driver’s licenses and governors are already pushing back.  At the NGA meeting, Homeland Security Secretary Janet Napolitano spoke to the governors about softening the blow to state budgets, as the Associated Press reported:


Several governors joined Homeland Security Secretary Janet Napolitano in calling on Congress to revise requirements by this fall for secure driver's licenses that are intended to help boost national security. The governors said federal mandates for the licenses are too expensive, and 13 states have voted not to participate in the Real ID Act passed after the terrorist attacks of Sept. 11, 2001.


The cost to states of implementing the federal mandate is estimated at $4 billion.


Earlier this month, however, the same Secretary Napolitano, on behalf of the Obama Administration, announced an expansion of the 287(g) program that enlists state and local police and other law-enforcement in enforcing federal immigration law.  While she trumpeted a new regime of oversight and accountability for the program – a program that until now has been a community safety and civil rights nightmare – the bottom line is that more states and localities will be saddled with enforcing laws on behalf of the federal government. 


With resources stretched already at the breaking point in states and localities, expanding cost- and responsibility-shifting programs like 287(g) couldn’t come at a worse time.  Police chiefs and administrators with experience policing in immigrant communities understand that acting as federal migration cops drives a wedge between local police and immigrant communities and may keep witnesses and victims from coming forward.  From a purely fiscal point of view, while the 287(g) program includes some money for training local police, it still adds enforcement burdens to state and local governments already struggling to stay afloat. 


This and imposing new driver’s license mandates on states – at an estimated cost of $4 billion starting this year – threatens to make a bad situation worse.


Wasting Tax Money on Ineffective Measures

Also this month, at the request of Sen. Jim DeMint of South Carolina, one of the Senate’s biggest opponents of legal immigration, the Senate voted to expand construction of the border fence on the U.S.-Mexico border and further dictate the manner in which it is to be constructed. 


Over the weekend, the Houston Chronicle reported that border state Members of the House are hoping to kill the wasteful spending:


House Democrats from Texas, Arizona and California argue that requiring pedestrian, double-layered fence, instead of using vehicle barriers and technology, “represents wasteful spending that could alternatively be used for multitude of valuable security purposes.”


They are asking Pelosi, House Majority Leader Steny Hoyer, D-Md., and House Appropriations Committee Chairman David Obey, D-Wis., to remove the fence funding in negotiations with the Senate.


The Chronicle reports that the Government Accountability Office (GAO), the investigative arm of Congress, found that the cost of pedestrian fencing had increased from $4 million a mile to $7 million a mile in the past year.


That $7 million per mile cost is just one of the huge price tags the nation incurs along the border because we do not have a functioning legal immigration system.  A backgrounder by the National immigration Forum on existing border security operations at the Southwest border provides more detail.


Also, because there is no way for immigrants who have no criminal record and are here illegally to become legal residents, we spend nearly $1 billion detaining non-criminal immigrants.  ICE, the Immigration and Customs Enforcement bureau, for example, houses 18,690 immigration detainees on a typical night, costing taxpayers approximately $2.6 million per day.  See a recently posted backgrounder by the Forum on detention issues and costs for more detail.


Forgoing Tax Revenues

Finally, there is the opportunity cost of inaction and failing to get 12,000,000 immigrants here illegally to become legal and fully part of our economy.  The Immigration Policy Center states


Legalizing undocumented workers would improve wages and working conditions for all workers, and increase tax revenues for cash-strapped federal, state, and local governments. Moreover, comprehensive immigration reform that includes a path to legalization for undocumented workers would pay for itself through the increased tax revenue it generates, in contrast to the failed and costly enforcement-only policies that have been pursued thus far.


Looking at a previous proposal to legalize the American workforce and move undocumented immigrants into the taxed, above-board economy, CBO calculated $66 billion in added federal revenues as the work of immigrants and businesses that employ them became fully tax compliant.


If the federal government is serious about helping states get back in the black, it will stop doing what it is doing – making the bad immigration situation worse – and start doing what it has up until now only talked about – fixing America’s immigration system comprehensively from top to bottom.


[See also Assessing the Financial Impact of Immigrants at the State and Local Level (Immigration Policy Center)]

Crossroads Campaign Solutions