Fiscal Focus
Massive immigration, especially the undocumented variety, is a “hot” topic because it resists discussion without the thinly veiled presence of hostility to foreigners, particularly if those foreigners are not white.
The “cooler” heads try to conclude debate by pointing out that the pluses and minuses of immigration by low income workers come close to balancing out. The wages lost by low skilled native workers due to increased labor competition enhance the profits of business owner/employers. The increases in social security, income and sales taxes will more than pay for the social welfare benefits that these immigrants are likely to receive.
The bottom line claim is that since the negative impact on the losing individuals is so small, the complaints are really motivated by xenophobia and racism.
The key word in the previous text was “balance”. It’s difficult to calculate with any confidence the benefits and costs to all the people and governments that are impacted by large scale increases in low wage workers and residents, but by declaring that the net sum of all the winning and losing as a draw avoids a treatment of whether it’s overall, a good or bad thing. Move along. There’s nothing to see here.
The losers are left to survive by their wits in competitive America. According to some libertarian critics, it’s the losers’ fault for putting themselves in a position so vulnerable to this competition in the first place.
The fact that benefits and costs are distributed unevenly among individuals is one of the few points of agreement. My focus here is the ways in which the distribution of benefits and costs disfavors the states, and more importantly, the local governments and school districts where individuals on the losing side happen to reside.
The pattern of difficulties for cities and counties flow from the familiar sources of economic stress: one old one, poverty; and one with a new name, globalization.
Partly because of the regressive structure of Social Security and Medicare contributions when compared to state income taxes, revenue collections from low income families tend to flow to the federal level.
It should be noted here that most unauthorized immigrants are precluded from receiving federal benefits through Social Security, Food Stamps, Temporary Assistance to Needy Families (TANF – welfare) and Medicaid other than emergency services. At the same time, federal mandates require that local governments provide certain services, regardless of legal status:
• Education – children who are unauthorized immigrants represent about 4% of school age population. Another 6% are U.S. born citizens born to unauthorized immigrants.
• Health care – many times through emergency rooms and public hospitals
• Law enforcement
States execute these responsibilities at various levels of generosity within the guidance of court decisions.
However, the methods used to distribute federal and state funds to local agencies usually disfavor places with low income populations. High concentrations of undocumented residents make it worse.
By definition, low income and poor families put disproportionate demands on social services when compared to the rest of the population. Again, the problems are further amplified with lack of documentation:
• Dependence on health care services, but the undocumented are even less likely to have health care insurance coverage
• Subsidized low income housing, but the undocumented may be reluctant to register for waiting lists
• State cuts to social welfare services for low income families are further justified by the increased political acceptance for denying access by unauthorized residents
• Cuts in K-12 education funding are exacerbated by the fact that educating English learners drives up per student costs by 20% to 40%.
In recent decades, local governments have tended toward increased fiscal dependency on the state capitals. States like California have restrained local capacity to tax its own citizens while the state confiscates local funds. Low income communities tend to have weaker tax bases in any case because of lower property values and fewer businesses. Then starting most notably with the Interstate Highway System, the federal government encouraged new economic development in outlying suburban settings, further diminishing tax revenue streams in central cities and older suburbs. Several states also participated in a “race to the bottom” in which social benefits are cut and explicit barriers are erected to avoid attracting low income families from other states.
Beginning with the 1986 “immigration amnesty”, federal programs were initiated to mitigate the impact of service demands attendant to the newly recognized residents. The federal programs aimed at compensating local agencies for immigration-related costs do not provide 100% reimbursement. In 1994 the Department of Justice started providing assistance to states for incarcerating unauthorized immigrants who were convicted of crimes other than immigration-related offenses (State Criminal Alien Assistance Program– SCAAP). The program only covers those incarcerated for felonies or multiple misdemeanors who have been in custody for at least four days and only covers the salaries of correction officers – not housing, meals or medical care.
Under No Child Left Behind education assistance, states are given money to help with language-related instruction issues, but not general education costs.
Ironically, other federal programs that might be used to help with local costs are impaired by the census under-count. Targeted funds never reach some of the very populations that tend not to get fully counted.
Here are cases where under-counts could be critical because of the targeted nature of the program:
1. Special Programs for the Aging, Title III, Part C, Nutrition Grants for nutrition service and home delivery are calculated using share of the state’s population age 60 and over
2. Part of the allocation for Maternal Child Health grant is in proportion to the state’s fraction of the nation’s low income children
3. Child Abuse and Neglect state grants as well as parts of the Runaway and Homeless Youth Act are base on the distribution of children under age 18.
4. Community Development Block Grants (CDBG) amounts are driven by:
• population
• the number of persons below the poverty level
• housing overcrowding (number of overcrowded housing units. A housing unit is overcrowded when more than 1.01 persons per room are living in the unit),
• and the age of the housing - age is the number of housing units built before 1940.
• population growth lag - growth lag is the shortfall in population that a city or
county has experienced when comparing its current population to the population it would have had if it grew like all metropolitan cities since 1960.
The rapid increase in undocumented residents during the 1990s was of course, missed by the 1990 census.
So far, the equity of reimbursement to states has been the main subject here. The murkier arena of eventual distribution down to local government agencies will be the subject of future postings.
While resolving the disposition of the 10-20 million unauthorized immigrants is held up by political uncertainty, there is less doubt about the increased burden falling on communities already stressed by reduced sales and property tax, foreclosures, reduced state aid for education and health care.
Sometimes the objections to the increased presence of low income immigrants are not about race: sometimes it’s just about money.
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