April 01, 2008
Schwarzenegger in Denial On Illegal Alien Costs
Ahnold is
at it again. The governor of the state with
one-quarter of all U.S. illegal aliens says it would
be a “big
mistake” to blame them for the state’s looming
$8 billion
budget problem:
“I can
guarantee you, I have been now
four years in office in Sacramento, I don’t think
that
illegal immigration has created the mess that we are
in.”
Memo to the
Gov: When it comes to analyzing the
cost of illegals, California has been here, done
that.
In the
early 1990s California faced a sinking economy not
unlike today’s.
Social welfare caseloads exploded, state revenue
declined by more than 25 percent and the state’s budget
deficit was an unprecedented one-third of total general
fund spending.
Caseloads
continued rising even after the recession ended, a trend
many officials blamed on
illegal immigrants. In 1993 California
Governor Pete Wilson sued the
federal government for the costs of state services
to illegals, arguing that Washington mandated the
provision of such services while
failing to prevent the illegal influx. Five other
magnet states—Arizona, Florida, New York, New Jersey,
and Texas—joined
the suit.
The
perception of fiscal burden propelled passage of
Proposition 187, a California initiative denying
certain services to illegal aliens.
Perhaps the
current Gov was filming
True Lies when the Wilson Administration
released its analysis of the budgetary consequences of
illegal aliens. [Philip J. Romero et al., Shifting
the Costs of a Failed Federal Policy: The Net Fiscal
Impact of Illegal Immigrants in California (prepared
for the Governor’s Office of Planning and Rsearch and
the California Department of Finance, September 1994.
PDF]
The 1994
study estimated illegals (and their U.S.-born children):
The study’s
author,
Philip J. Romero, was up front about the
uncertainties surrounding such estimates. For each
important parameter—tax rates, benefit payments for
illegals and natives, for example—Romero presented a
range of estimates—high, median, and low.
His
high-end tax estimate assumed that illegals pay taxes at
the same rate as the average Californian—highly unlikely
given
lower immigrant incomes and a
progressive state income tax. Even at this
unreasonably high tax figure, however, illegals were
estimated to have received roughly $5 in
services for every dollar they paid in taxes.
Surprise,
surprise: the immigration lobby attacked Wilson’s study.
But they quickly quieted down when, in 1997, the
Jordan Commission revisited the same question—and
reached the same conclusion. . The commission’s analysis
of California, done by the
National Research Council (NRC) and published in
The New Americans (1997), found a significant
fiscal transfer from natives to immigrants
In a
section on California’s budget, the Commission report
presented evidence of a significant fiscal burden
imposed by immigrants:
“Combining the
state and local public-sectors, native households pay an
additional $1,178 per household in revenues above
services received to support a net fiscal transfer to
the average immigrant-headed household of $3,463 ….As in
New Jersey, the immigrant group making the biggest
contribution to this net fiscal burden on native
households in California is
families from Latin America.”
[The
New Americans: Economic, Demographic, and Fiscal Effects
of Immigration, P 280]
Most of the fiscal
burden occurred at the state government level, where
native households paid $895 more tax than they received
in services—the difference going to immigrant
households.
As I
reported in VDARE.com, the NRC figures—adjusted for
inflation and growth in the state’s immigrant
population—imply California immigrants receive $9.3
billion more in state expenditures than they pay in
state taxes.
I may have grossly
under-estimated the damage. (Read on.)
In a recent article
in The Social Contract Magazine, Romero updates
his 1994 study
[Racing
Backwards—The Fiscal Impact of Illegal Immigration in
California, Revisited
(Summer 2007)].
He now estimates that
California’s illegals receive from $9.6 billion to $38.2
billion more state services than they pay in state
taxes. His median estimate—$21.2 billion in 2005—equals
nearly 22 percent of state spending.
Inescapable
conclusion: Deport
California’s illegal immigrants and the current $8
billion budget shortfall
would become a $13 billion budget surplus.
Do the math, Gov.
Edwin S. Rubenstein (email
him) is President of
ESR Research Economic Consultants in Indianapolis.
