Immigration Surge Drains $9 Billion from State and Local Budgets in 2023, Nonpartisan CBO Reports

The influx of immigration since 2021 has significantly impacted state and local finances, leading to a reported net cost of $9.2 billion in 2023, according to a recent nonpartisan study by the Congressional Budget Office (CBO).

Approximately 4.3 million immigrants arrived in the U.S. during this period, contributing an estimated $10.1 billion in state and local taxes. The net gain in population, factoring in births and deaths, amounted to about 4.4 million, CBO indicates.

However, government expenditures for services catered to this demographic reached an estimated $19.3 billion, primarily focused on education and shelter. This expense results in a net cost that represents 0.3% of total state and local spending.

The CBO report highlights that while tax revenues increased in 2023, the surge in spending outpaced this growth. An alternative analysis suggested that indirect effects—like rises in property taxes and heightened demand for services—could increase spending to $28.6 billion and revenue to $18.8 billion, resulting in a net loss of about $9.8 billion.

Most new immigrants settled in just six states: California, Florida, Illinois, New Jersey, New York, and Texas. In public schools, around 1.1% of students, or roughly 550,000, were immigrants who had arrived since 2021.

The CBO attributed a direct increase in public education spending of $5.7 billion in 2023 to this surge, noting that a significant factor was the lower English proficiency observed among new arrivals. Additional services for English-language learners cost state and local governments an estimated $1.2 billion in the same year.

Shelter services constituted another major expense, particularly in New York, Massachusetts, Illinois, and Colorado, which collectively spent $3.3 billion on shelter and related services including food and legal aid for recent immigrants.

In response to escalating migration at the southern border—the highest in two decades—the Biden administration initiated various programs aimed at facilitating work permits and legal entry for migrants awaiting asylum decisions.

A report from the Center for Migration Studies revealed that the population of individuals without permanent legal status rose to 12.2 million by 2023, an increase of 2 million as detailed in the latest Census Bureau American Community Survey.