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Immigration and Texas' Budget Crisis: The Elephant in the Room By: Chris Allen
FrontPageMagazine.com | Monday, December 30, 2002


The coming session of the Texas Legislature has been billed as "the perfect storm" because of the looming $5 to $12 billion-dollar budget shortfall. Although the evidence suggests that immigration, both legal and illegal, is fueling the rapid growth in state spending on social services, this issue is almost entirely absent from the debate.

It is well established that recent immigrants use more in services than they pay in taxes, particularly to state and local governments. The National Research Council, a branch of the prestigious National Academy of Sciences, estimates the net fiscal cost of
immigration ranges from $11 billion to $22 billion per year, with most government expenditures on immigrants coming from state and local coffers, while most taxes paid by immigrants go to the federal treasury. This is the result of the relatively low level of tax payments by immigrants, because they are disproportionately low-skilled and thus earn low wages, and a higher rate of consumption of government services, both because of their relative poverty and their higher fertility.

According to 2000 U.S. Census data, some 13.2 percent of im
migrants enroll in welfare programs compared with 2.1 percent of native-born Americans. In Medicaid, 18.6 percent of immigrants participate, as opposite 12.1 percent of native-born. Mexican immigrants, who comprise the vast majority of immigrants to Texas, use food stamps at nearly twice the rate of native-born Americans and collect an average welfare payment that is 20 percent higher than those recipients.

The National Research Council found that in California, which has endured a similar flood of Mexican immigration as Texas, each native household is paying
about $1,178 a year in state and local taxes to cover the gap between the services used by immigrant households and their tax receipts. Although Texas was not included in this study, there is no reason to think the reality is any different here.

Indeed, during the last three years, the Harris County Hospital District alone spent $330 million to treat and immunize illegal immigrants, estimated to be at least 20 percent of their indigent caseload. The District covers this expense through its escalating tax burden
 on local taxpayers and through cost-shifting to Medicaid and insured patients. The District provides not only emergency care to illegal immigrants, but also a full range of elective services, even access to its fertility clinic that is not included in the health plan for District employees. While the 700,000 illegal immigrants in Texas are only eligible for welfare if they have worked for at least ten years or received asylum, they receive free health care, food stamps, education, and nearly all other government services.

In 2002, Medicaid represented 22.6% of Texas' budget. That number is expected to increase to 23.7% in 2003 in the wake of an August 19 report by the
Health and Human Services Commission concluding that, because of higher-than-planned growth in caseloads, the state's Medicaid and children's health insurance programs will cost $2.4 billion more in the next budget cycle than in the current one. Since 1987, the Texas Medicaid budget has grown 500 percent, due in large part to increased enrollment, much of it undoubtedly the result of immigration.

The growth in state health care spending is just one example of how immigration is contributing to the budget shortfall. All of the school districts in South Texas receive Robin Hood recapture payments. Although these districts would likely be poor
regardless of current levels of immigration, they would not be experiencing such large growth in their enrollments. It is this growth that is responsible for the budget crises in both urban and suburban districts that are being forced to send more and more of their local tax revenues to the state, leaving them unable to meet the needs of their own students.

Immigration is also a major factor in the population
growth that is responsible for growing traffic congestion and pollution in Texas' major cities.

Ultimately, the Legislature's sensitivity to public opinion is likely to forestall a general tax increase this session, but that may come at the expense of
vital funding for transportation and higher education, as well as Robin Hood relief. Unfortunately, even though the state bears most of the cost of immigration, it is virtually powerless to control it because it is the constitutional responsibility of the federal government.

Until Washington fortifies border enforcement to stop illegal immigration and reduces the number of unskilled legal immigrants, Texans will pay for the
consequences, whether in higher taxes or the crowding out of important government services. While immigrants continue to contribute much to Texas and the nation, if we attempt to absorb all of the many millions of indigent people throughout the world, we will sacrifice the very quality of life that has led so many people to come here.

Chris Allen is State Chairman of the Young Conservatives of Texas (www.yct.org) and a graduate student at the George Bush School of Government and Public Service at Texas A&M University.




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