What fiscal impacts have sanctuary policies had on city and state budgets, and how are costs measured?
Executive summary
Sanctuary policies produce a mixed fiscal picture: several academic and advocacy studies find net local economic and budgetary benefits—higher incomes, lower poverty, and avoided enforcement costs—while political and watchdog reports emphasize potential lost federal grants and one-off local costs tied to services for newcomers [1] [2] [3]. Measurement varies widely across studies, producing contested estimates that drive the modern policy fight over whether sanctuary rules are budget savers or fiscal risks [4] [5] [6].
1. How scholars measure fiscal effects: matching, detainers, and budget accounting
Researchers typically measure sanctuary policy impacts by comparing counties or cities that adopt “limited-cooperation” rules to otherwise similar jurisdictions using statistical matching or difference‑in‑differences designs, and by using ICE datasets (detainer records) to classify jurisdictions and estimate changes in crime, labor, and fiscal indicators [1] [4] [5]. Fiscal‑specific methods include: tallying direct local expenditures (public safety, health, schooling), estimating costs avoided by not honoring ICE detainers (staff time, housing in jails), and comparing revenue effects tied to labor market changes such as employment and tax receipts—approaches documented in applied economics and urban studies literature [4] [5] [1].
2. Estimated savings: enforcement costs avoided and local budget wins
Some analyses quantify concrete savings from non‑cooperation with ICE: one recent estimate claims sanctuary jurisdictions save local governments roughly $101 million annually by avoiding ICE‑related costs, against a cooperating‑jurisdiction bill of roughly $3.28 billion for ICE activities—numbers that frame sanctuary policies as a local cost‑avoidance strategy [2]. Academic work and policy reports also link sanctuary counties to stronger macro indicators—higher median household income, lower poverty, greater labor participation—that translate into fiscal benefits over time through higher local tax bases and lower means‑tested spending pressure [1] [5].
3. The counterfactual: federal funding risk and one‑off local expenses
Opponents warn that sanctuary rules put billions in federal funding at risk and impose immediate local costs for services to noncitizen residents; conservative and news outlets have produced tabulations of federal grants potentially affected and have highlighted high‑profile municipal budget vulnerabilities—Philadelphia received roughly $2.2 billion in federal funding in one recent fiscal year, a share that critics argue could be jeopardized by sanctions [6] [7]. Reports from advocacy groups and watchdogs reach divergent conclusions about how much federal funding is “at stake,” and congressional or executive threats to withhold funds remain an outside fiscal variable that can overwhelm local savings calculations [3] [6].
4. Where empirical work agrees — and where uncertainty remains
Empirical consensus is modest: multiple peer‑reviewed and policy studies find no link between sanctuary policies and higher crime and, in many cases, better socioeconomic outcomes that can improve local finances [1] [8]. But measurement challenges are persistent—definitional ambiguity over what constitutes a sanctuary jurisdiction, unobserved migration flows, local policy heterogeneity, and the political risk of federal withholding complicate causal attribution and make headline dollar estimates highly sensitive to assumptions [5] [4] [9]. Several sources explicitly note limited empirical work on fiscal tradeoffs and stress that results are context dependent [8] [4].
5. Practical implications for municipal budgeting and policy debates
For city and state budget makers the practical calculus is twofold: quantify local enforcement‑related savings and longer‑term economic gains from immigrant integration, and separately model downside scenarios in which federal grants are reduced or legal costs rise—an approach reflected in municipal budget documents that flag large deficits and federal dependence as key risks (San Francisco’s recent billion‑dollar deficit reporting and Philadelphia’s federal funding share are cited as local vulnerabilities) [10] [7]. Both advocates (highlighting social and fiscal benefits) and critics (highlighting service costs and federal exposure) use empirical studies selectively; transparent, jurisdiction‑level accounting that presents best‑estimate savings and worst‑case federal‑cut scenarios is the only way to make the fiscal tradeoffs operational for policymakers [1] [2] [6].