Much has been written in recent months about the costs and economic benefits associated with the rising number of undocumented immigrants in Texas and the U.S. as a whole. Most reports tie the costs of the undocumented population to education, medical expenses, incarceration and the effects of low-paid workers on the salaries of legal residents. Revenue gains to governments resulting from undocumented immigrants consist primarily of taxes that cannot be avoided, such as sales taxes, various fees and user taxes on items such as gasoline and motor vehicle inspections.
This financial report focuses on the costs to the state of Texas; that is, services paid for with state revenue, including education, healthcare and incarceration. What government-sponsored services are available to undocumented immigrants is often determined by federal restrictions on spending (Exhibit 1). The report also identifies areas of costs to local governments and hospitals. Finally, it analyzes the $17.7 billion impact on the state’s economy as well as state revenues generated by undocumented immigrants.
Major Government-Sponsored Programs and their Availability to Undocumented Immigrants
|Medicaid||Emergency Medical Care|
|Cash Assistance (TANF-Welfare)||Children with Special Health Care Needs|
|Children’s Health Insurance Program (CHIP)||Substance Abuse Services|
|Food Stamps||Mental Health Services|
|Supplemental Security Income (SSI)||Immunizations|
|Public Housing Assistance||Women and Children’s Health Services|
|Job Opportunities for Low Income Individuals||Public Health|
|Child Care and Development||EMS|
Source: United States Department of Health and Human Services.
The Comptroller’s report estimates that undocumented immigrants in Texas generate more taxes and other revenue than the state spends on them. This finding is contrary to two recent reports, FAIR’s, “The Cost of Illegal Immigration to Texans” and the Bell Policy Center’s “Costs of Federally Mandated Services to Undocumented Immigrants in Colorado”, both of which identified costs exceeding revenue.
In education, FAIR’s report included the costs of legal children to undocumented parents. The inclusion of these children dramatically increased the costs reported. The Comptroller’s report focuses its attention on the costs directly attributed to undocumented persons. Colorado’s report differed from the Comptroller’s report in identifying which undocumented children should be included in any estimates. Colorado assumed all undocumented children between the ages of 5 and 17 were in public schools, and therefore did not account for children that did not attend school or were enrolled in private schools.
For health care costs, FAIR’s report estimated costs to local taxpayers and not exclusively the state. Colorado’s report states their estimate of state health care costs is overstated due to the fact the authors included legal permanent residents as well as other authorized immigrants in their count of undocumented immigrants.
The difference in the reports also may be related to the tax systems in the two states. Unlike Colorado, Texas has no income tax and relies heavily on consumption taxes at the state and local levels. Texas is more likely to capture tax revenue from workers who do not report income. Whereas income taxes will miss much activity in an underground economy, a sales tax will more likely be collected no matter how one earns an income.
Consumption taxes make up a greater percentage of total state revenue in Texas than in most other states. Since undocumented immigrants are more likely to work in the underground economy from which income taxes may not get collected, the Texas tax system, compared to other states, may capture a greater percentage of all the taxes that should be paid from the economic activity of undocumented immigrants.
As this report shows, calculating the impact of undocumented immigrants on the Texas economy and state budget is at best an educated guess. This is a result of the difficulty in calculating the number of undocumented immigrants in the state and the number who access state paid services. It is difficult to count a population that does not want to be counted, particularly when the law allows them access to many government services without regard to citizenship, such as those delivered by public hospitals and public schools.
This report uses some estimates of the Pew Hispanic center when calculating the number of undocumented immigrants in Texas, and of the U.S. Census Bureau when discussing foreign-born residents. Various methods are used in calculating the number of undocumented immigrants that received services.
All levels of government experience costs associated with undocumented immigrants. In fact, this report estimates the largest costs to local governments and hospitals; that is, incarceration and uncompensated health care costs. The Comptroller estimates costs of $1.3 billion for hospitals and $141.9 million for local incarceration attributed to undocumented immigrants. Likewise, the Comptroller estimates undocumented immigrants paid more than $513 million in local taxes. While this report acknowledges those costs, the main focus is the cost to the state of Texas, that is, costs paid with state revenues. While there may be costs of some state paid services not reported or deemed inestimable, the largest cost items are identified. Likewise, there may be some state revenue unaccounted for, but the largest revenue sources are used in the Comptroller’s calculations.
As mentioned earlier, the Comptroller’s office recognizes that there are costs associated with the legally resident children of undocumented immigrants. The Comptroller has chosen not to estimate these costs or revenues due to uncertainties concerning the estimated population and the question of whether to include the costs and revenues associated only with the first generation or to include subsequent generations, all of which could be seen as costs.