E xecut ive Summary | Analysis of the latest Census dataindicates that Arizona’s illegal immigrant population is costing thestate’s taxpayers about $1.3 billion per year for education, medical careand incarceration. Even if the estimated tax contributions of illegal immi-grant workers are subtracted, net outlays still amount to more than $1 bil-lion per year. The annual fiscal burden borne by Arizonans amounts tomore than $700 per household headed by a native-born resident.

This analysis looks specifically at the costs of education, health care andincarceration because they represent the largest cost areas and because a1994 study conducted by the Urban Institute, which also examined thesesame costs, provides a useful baseline for comparison ten years later.Other studies have been conducted in the interim, showing trends thatsupport the conclusions of this report.

As this report will note, other significant costs associated with illegalimmigration exist and should be taken into account by federal and stateofficials. But even without accounting for all of the multitude of areas inwhich costs are being incurred by Arizona taxpayers, the programs ana-lyzed in this study indicate that the burden is substantial and that thecosts are rapidly increasing.

The $1.3 billion in costs incurred by Arizona taxpayers is comprised ofoutlays in the following areas:

n EDUCATION. Based on estimates of the illegal immigrant populationin Arizona and documented costs of K-12 schooling, Arizonans spend

Not much attention ispaid to thetremendous costs ofmandates imposed onstates and localgovernments thatmust provide care to aswelling number ofnon-citizens withintheir borders. Yetthose costs ultimatelytake a human toll, too.Every tax dollar spenton emergency care orcriminal justice for anillegal immigrant hasto be paid for byAmerican taxpayers.

—Senator John Ky l ,“The Costs of Illegal

I m m i g r a t i o n ,”J a n u a ry 11, 2 0 0 2

approximately $810 mil-lion annually on educa-tion for illegal immi-grant children and fortheir U.S.-born siblings.

n HEALTH CARE. Uncom-pensated medical out-lays for health care pro-vided to the state’s ille-gal alien population isnow estimated at about$400 million a year.

n IN C A R C E R AT I O N. T h ecost of incarcerating illegal aliens in Arizona prisons and jails amounts to about $80 million a year(not including the monetary costs of the crimes that led to their incarceration).

The unauthorized immigrant population pays some state and local taxes that go toward offsettingthese costs, but they do not come near to matching the expenses. The total of such payments mightgenerously be estimated at $257 million per year.

The fiscal costs of illegal immigration do not end with these three major cost items. The total costs ofillegal immigration to the state’s taxpayers would be considerably higher if other costs such as specialEnglish instruction, school nutrition programs, or welfare benefits for American workers displaced byillegal alien workers were added into the equation.

I L L E G A L I M M I G R A N T S2004 OUTLAYS AND RECEIPTS

C a t e g o r y O u t l a y s R e c e i p t s Net Cost

E d u c a t i o nIllegal Aliens $330,000,000 $330,000,000

Children of Illegal Aliens 480,000,000 480,000,000

Uncompensated Medical Care 400,000,000 400,000,000

Incarceration 80,000,000 80,000,000

Tax Payments 257,000,000 -257,000,000

To t a l $1,290,000,000 $257,000,000 $1,033,000,000

Arizona had the second highest propor-tion in the country of illegal immigrantsin its population in 2000. The estimate bythe Immigration and NaturalizationService was that there were 283,000 aliensresiding illegally in the state. That repre-sented more than 5.5 percent of the state’spopulation.1 As recently as 1996, the INSestimated that the resident illegal alienpopulation in the state was 115,000 per-sons — a nearly 150 percent increase injust four years. This estimate does notinclude about 83,000 persons who werealso part of Arizona’s illegal alien popu-lation until they were given legal resi-dence as a result of the 1986 amnesty.

Not only has Arizona’s illegal alien popu-lation grown rapidly, the overall foreign-born population has shot up since the 1965change in U.S. immigration law. Similarly,the size of the immigrant stock (whichincludes the offspring of immigrants aswell as the immigrants themselves) hassurged. Both of these groups contribute tothe costs of illegal immigration. The prog-eny of immigrants — both legally and ille-gally in the country — is now greater thanthe foreign-born population (see chart).

This study looks at the fiscal costs and taxpayments associated with illegal immigra-tion. It does not look at the goods andservices produced by illegal alien workers,i.e., their economic contribution, as it maybe assumed that if illegal immigrants wereunavailable the same labor, if essential,would be done by legal workers.Similarly, this study does not include thedisplacement costs incurred by legal

2

The Costs of Illegal Immigration to Arizonans FAIR

Background Information

Arizona Immigrant Stock1 9 7 0 – 2 0 0 0

Studies of the cost of illegal immigration to Arizonans havebeen done previously. In 1994, the Urban Institute releaseda study of the costs of illegal immigration — which includedArizona — funded by the U.S. Department of Justice thatestimated educational, medical and incarceration costsassociated with illegal immigration and related tax pay-ments. A study by researchers at New Mexico StateUniversity was done for the United States-Mexico Border

Counties Coalition in 2001.2 Also in 2001, a cost studywas done at the University of Arizona. The GeneralAccounting Office did a study of the costs of uncompensat-ed medical expenditures incurred as a result of illegal immi-gration in 2002. Thunderbird School Latino students andfaculty did a June 2003 study on Mexico-Arizona econom-ic relationships that included estimates of uncompensatedcosts and tax payments. All of these studies have beentaken into consideration in the process of conducting thisestimate of the current costs of illegal immigration toArizonans set forth below.

3

The Costs of Illegal Immigration to Arizonans

workers who are laid off or fail to get a job as aresult of being undercut by illegal workers willingto work for lower wages. Those costs, whichwould include unemployment compensation,welfare outlays, lost taxes, etc., are real, but diffi-cult to quantify.

National recognition of the fact that illegal immi-gration represents a fiscal burden, especially onthe states that border Mexico, may be seen in thefact that the Congress has authorized and appro-priated funds in the past to assist Arizona foruncompensated medical expenses and otherfunds to compensate for the incarceration of ille-gal immigrants. A further example of recognitionof the fiscal costs associated with illegal immigra-tion may be seen in the State LegalizationAssistance Impact Assistance Grants (SLIAG) pro-gram, which provided $3.5 billion to states in theaftermath of the 1986 amnesty for illegal aliens toease the burden of the additional expenses that thestates were required to assume. Those grantsphased out in 1994, and the states since then havebeen bearing an unreimbursed burden associatedwith this amnestied illegal immigrant popula-tion.3

FAIR

What Are the Costs of Illegal Immigration?

The costs of illegal immigration are both quantifi-able and non-quantifiable. Because data on illegalimmigration are generally not kept, even quantifi-able costs must be educated estimates.

Some of the quantifiable costs are:• Law enforcement costs result from investigat-

ing property loss due to theft and damagecaused by illegal border crossers.

• Medical costs are incurred when an alien’shealth is affected while illegally entering thecountry. Some of these costs were compensat-ed in the past, and legislation has been intro-duced to restart the compensation program,but at present the costs are uncompensated.4

• Additional unpaid medical expenses may beincurred from accidents while illegal immi-grants are being smuggled or otherwise tryingto get to interior locations.

• Aliens illegally residing in the country, usuallywith no medical insurance, generally turn toemergency medical facilities for their treat-ment.

• Well-baby maternity care and delivery expens-es are incurred for illegal alien women. Othermaternity expenses may also be attributable toillegal immigration if the father is illegally inthe United States.

• Educational outlays for illegal immigrantsincurred by public schools for enrolled illegalalien children are a clear-cut expenditure oftaxpayer funds due to illegal immigration.The bulk of those expenditures are from stateand local budgets.

• Other related expenses result from the educa-tion of the U.S.-born children of illegal aliens.

• Further outlays accrue from the added expens-es that result from Limited English Proficiency(LEP) programs, e.g., staff salaries and foreignlanguage teaching materials.

• Still more expenses result if the foreign studentis poor and participates in a school-basednutrition program, i.e., the National SchoolLunch Program (NSLP) and the SchoolBreakfast Program’s (SBP).

4

The Costs of Illegal Immigration to Arizonans FAIR

• Illegal immigrants generally have low earn-ings that would qualify them for state welfareassistance, which, unlike federal benefits, isnot precluded by Arizona’s screening system.To enroll for Arizona state benefits, the appli-cant need only indicate on the application thathe or she is a U.S. citizen or legal resident. Asa result there are illegal aliens receiving wel-fare benefits in Arizona on their own behalf orin the name of their U.S.-born children. Ameasure passed by the Arizona state legisla-ture requiring an investigation of welfare pay-ments to illegal aliens has been thwarted bythe failure of legislative leaders to establish thetask force to conduct the study. 5, 6 A study ofw e l f a re payments to illegal immigrantsnationwide by the Center for ImmigrationStudies concluded that average non-medicalwelfare payments to illegal-immigrant headedhouseholds averaged $151 per year.7 F o rArizona, that would amount to about $15 mil-lion per year.

• Another major cost borne by Arizona taxpay-ers results from incarcerated illegal aliens.These aliens may have been appre h e n d e dentering the country after prior deportation orhave committed serious crimes while residingin Arizona. If they are tried on state charges,the state pays for the investigation, prosecu-tion, translation and interpreter services, judi-cial management, incarceration and possibleparole costs. The federal government providespartial compensation of those costs only if itaccepts responsibility for removing the aliensfrom the country upon release.

• American workers who are displaced by ille-gal workers willing to accept lower wagesmay qualify for a number of programs paid forby the taxpayer. In Arizona, those costs wereestimated to cost of about $175 million peryear in 1992 and would be significantly highertoday.8

Some of the non-quantifiable costs include:• Apart from incarceration, law enforc e m e n t

costs also are incurred in prevention andenforcement and in the judicial process forcrimes committed by illegal aliens.

• The illegal immigrant population contributesto the growing burden for providing an arrayof services in Spanish interpretation and trans-lation, especially in the health care, lawenforcement and judicial systems.

• The large number of school-age illegal immi-grants contribute to costs for parental liaison,translation at PTA meetings, and newslettersprinted in Spanish.

• While Arizona does not openly allow illegalimmigrants to enroll as residents in the state’shigher education institutions, there presum-ably are such students, and the tuition subsidyborne by the taxpayer is an additional cost.

• Increased insurance rates are associated withillegal immigration related crimes, especiallyproperty loss and auto theft.9

• Remittances sent abroad do not remain in thestate and contribute to the local economy. Ifthese wages earned by illegal aliens’ wereearned instead by U.S. citizens or legal resi-dents, the money would usually be spentlocally with beneficial multiplier effects.10

• If U.S. or legal residents were hired instead ofillegal workers, wages would rise from atighter labor market, and tax revenues collect-ed by the state would rise.

• Congestion and property value loss happensin areas where illegal aliens seek day jobs.

In addition there are non-economic costs, such asa degraded learning environment that may result

The Arizona state government filed a lawsuitagainst the federal government on May 2, 1994alleging that the state was unfairly deprived of$121 million in reimbursements that would havebeen paid if a 1986 law authorizing reimburse-ments to the states for expenditures for illegalimmigrants had been appropriated and dis-bursed. Arizona joined a number of other statesin asserting this legal claim. The lawsuit ultimate-ly was dismissed as a political matter for whichredress should be sought in Congress, not thecourts.

However, in preparation for arguing the case incourt, the Department of Justice contracted with

the Urban Institute to study the claimed expendi-tures and provide estimates of the burden borneby the states. The Urban Institute released itsreport, Fiscal Impacts of Undocumented Aliens:Selected Estimates for Seven States, in September1994. The study’s methodology compared taxpayments of all kinds with expenditures on onlythree programs, albeit the major cost areas, educa-tion, health care, and incarceration. In additionthe study estimated the amount of taxes paid bythe illegal immigrants and used that amount toarrive at a net uncompensated fiscal cost of $43.5to $46.5 million.

5

The Costs of Illegal Immigration to Arizonans

from students unable to keep up with the classbecause of language difficulty. Other examplesinclude inconvenience resulting from waiting toreceive medical attention when there is conges-tion in the emergency admissions offices of publichospitals, and the erosion of respect for the lawwhen an increasing share of the population livesillegally in the country, when law enforcement

officers are required to ignore this law breaking,and when employers illegally hire unauthorizedworkers. Social comity may be strained by havingto cope with increasingly pervasive language bar-riers, and rising income inequality associatedwith immigration may lead to societal tensionand conflict.

FAIR

U R B A N I N S T I T U T E S T U D Y1 9 9 4

I l legal Al ien FiscalC a t e g o r y

O u t l a y s R e c e i p t s Net Cost

E d u c a t i o n $55,000,000 $55,000,000

Uncompensated Medical Care 6,000,000 – 9,600,000 6,000,000 – 9,600,000

Incarceration 10,900,000 10,900,000

Tax Payments 29,000,000 -29,000,000

To t a l $72,500,000 – $75,500,000 $29,000,000 $43,500,000 – $46,500,000

Updating the Urban InstituteCost Estimates

6

The Costs of Illegal Immigration to Arizonans FAIR

The Urban Institute based its cost calculation onan estimate of 60,000 illegal immigrant residentsin 1993, while the state at that time estimated theillegal immigrant population at 52,000 persons.The most recent estimate of the resident illegalimmigrant population in Arizona by theImmigration and Naturalization Service (INS) —b e f o re it merged into the Department ofHomeland Security (DHS) — was 283,000 per-sons, reflecting the findings of the 2000 Census.

Since the completion of the 2000 Census, whichestimated the illegal population of the U.S. to beabout 7 million, newer estimates place that popu-lation between 9 million and 11 million.Assuming the same proportional growth in

Arizona’s illegal population, the state would like-ly have between 364,000 and 445,000 resident ille-gal aliens in 2004. These figures are consistentwith other reliable estimates. The New York Timesin 2001 cited an unnamed “official” source as pro-viding an estimate of the illegal alien populationin Arizona at about 400,000 persons.11

For purposes of updating the estimated costs ofillegal immigration in Arizona, an estimate of425,000 illegal residents in 2004 – half again thesize of the 2000 estimate – seems both defensibleand conservative. That is more than a seven-foldincrease in the estimate of the illegal alien pop-ulation used in the 1994 calculations by theUrban Institute.

Size of the Illegal Immigrant Population

Size of the Illegal A l i e nK–12 Student Population

The Urban institute estimated K-12 illegal alienenrollment in public education ten years ago at15,000 students, 50 percent higher than the state’sestimate.

FAIR, in its August 2003 re s e a rch re p o r t“ B reaking the Piggy Bank: How IllegalImmigration is Sending Schools Into the Red”used an Urban Institute calculation of the studentshare of the resident illegal population and calcu-lated a proportionate share in Arizona in 2000would be 37,400 students. Updating that estimateto 2004 implies an estimated illegal immigrantpublic school population of 48,000-59,000 stu-dents.

As Arizona is likely to have a larger than propor-tionate share, given its proximity to the borderand already sizable legal and illegal population,an estimate for 2004 of the illegal immigrantpublic school population in Arizona of 55,000seems both defensible and conservative. Thus,the public school-age illegal immigrant popula-tion has increased by more than three-and-a-halftimes since 1994 when the Urban Institute did itscalculation.

The estimate above of the illegal immigrant stu-dent population does not include those studentswho are the children of illegal immigrants, butwere born in this country. They too, however, are

7

The Costs of Illegal Immigration to Arizonans

in the Arizona public school system because ofillegal immigration, and the cost of educatingthem is an additional fiscal cost of illegal immi-gration.12

The Urban Institute’s Jeffery Passel, one of theresearchers who participated in the 1994 and sub-sequent studies of the school-age population,recently estimated that there were nearly twice asmany children born to illegal immigrant parentsas children who were illegally in the United Statesthemselves (3 million compared to 1.6 million).13Passel has estimated that 1.1 million of the illegal

alien children are K-12 school age — about 69 per-cent of that population. Moreover, most of thechildren of illegal aliens who are not currently inthe school system are below school age and willenter the system within a few years.

Applying the same calculation to the U.S.-bornchildren of illegal aliens yields an estimatedadditional 80,000 students in Arizona’s schoolswhose educational costs will also be included inthis study.14 Adding these two populations ofchildren of illegal aliens together indicates thatabout 15 percent of the state’s total K-12 publicschool enrollment is in this category.

FAIR

Cost of Educating the IllegalImmigrant K–12 Population

The Urban Institute’s 1994 calculation of the costof K-12 education in Arizona was based on a perstudent cost of about $3,667. This was about 20percent lower than the cost estimate of the State.If costs remained constant, the Urban Institute’sestimate of outlays on the education of the 2004population of illegal alien students would haverisen from $55 million to a present cost of about$202 million and the costs of educating the chil-dren of illegal aliens born in the United Stateswould be about $293.4 million. However, educa-tional outlays have not remained constant.

The FAIR research report on educational outlaysfor illegal immigrant education used the $4,999average per pupil cost in Arizona compiled by theNational Center for Education Statistics (NCES)for the 1999-2000 school year and calculated thecost of educating illegal immigrant students inArizona in 2000 to be about $187 million.15 Thiswas 17.5 percent higher than the estimate used bythe Urban Institute in its 1994 study.

Public educational expenses since 2000 have con-tinued to rise. NCES data indicate that betweenthe 1999-2000 school year and the 2001-2002school years the expenses in Arizona ro s ebetween 6.7 percent and 15.4 percent. Extendingthis trend through the 2003-2004 school yearwould make public education outlays at least 20percent higher than they were in 2000. Thus, out-lays in 2004 would be about $6,000 per pupil.

In addition, using an average cost factor probablyunderestimates the costs associated with the ille-gal resident population. As the authors of the1994 Urban Institute study explained, “We believethat undocumented aliens are more likely thanother students to live in urban areas where perstudent expenses are relatively high.”16

Using the updated estimate of the illegal K-12immigrant population and the estimated perpupil expenditure results in a current estimatedcost to Arizona’s taxpayers of at least $330 mil-lion per year.

8

The Costs of Illegal Immigration to Arizonans FAIR

Using the same per pupil cost estimate for theU.S.-born children of illegal aliens indicates thatthe additional expense of educating these chil-dren through the 12th grade is at least an addi-

tional $480 million per year — or a total annualeducational cost from illegal immigration of atleast $810 million per year.

Other StudiesA study in 2001 by the University of Arizona found an estimated $100 million in uncompensated

educational costs in fiscal year 1999 of illegal immigrants.17 The cost in that fiscal year as report-ed by the U.S. Department of Education’s National Center for Education Statistics (NCES) was$4,999 per pupil. The University study, therefore, must have assumed an illegal immigrant studentpopulation of about 20,000, only slightly more than half the estimate by the Urban Institute. Thisestimate probably did not take into consideration the much larger than expected illegal immigrantpopulation revealed in the 2000 Census and it did not include the costs of educating the U.S.-bornchildren of illegal aliens. In addition to not being up-to-date, its scope is narrow and the size of thestudent population is underestimated.

The Urban Institute’s 1994 calculation of the unre-imbursed expense to the state for emerg e n c ymedical services was a range of $6.6 to 9.6 million.This was higher than the state’s estimate of $3.9million for emergency medical services. A similarcalculation today would yield a very differentestimate.

The Urban Institute based its estimate of uncom-pensated medical outlays by Arizona taxpayersbased on data collected by the federal govern-ment in the State Legalization Impact AssistanceGrants (SLIAG) program. That program, author-ized and funded by Congress, helped states copewith the additional services they were required top rovide as a result of the 1986 ImmigrationReform and Control Act amnesty for nearly 3 mil-lion illegal alien residents. The Urban Instituteresearchers thought that the SLIAG model might

overstate the use of uncompensated medical out-lays for the non-legalized population becausethey might be reluctant to seek publicly-fundedemergency medical care. Nevertheless, their costestimate of the cost was based on their estimatesof the size of the illegal immigrant population andthe costs of emergency medical care per person atthat time.

As we showed above, the estimated illegal alienpopulation in 2004 in Arizona is more than seventimes larger today than it was ten years ago in theUrban Institute estimate. This implies conserva-tively that the Urban Institute’s estimated emer-gency medical outlays would be about $48-$70million today if costs were constant, which, ofcourse, they are not. If those medical expenseswere adjusted for inflation, they would be about$59.4-$86.6 million today.

Emergency Medical OutlaysUpdated Estimate

9

The Costs of Illegal Immigration to Arizonans

A study released in September 2002 by the U.S.-Mexico Border Counties Coalition (BCC), a groupof local and state government leaders from bordercommunities, estimated that illegal immigrantsracked up $190 million in unpaid bills at 77 borderhospitals in 2000. The figure did not includeMaricopa County, which estimates its costs at morethan $50 million.18 According to the AmericanMedical Association, the true cost of the care pro-vided to these immigrants might be substantiallyhigher, because services delivered by a physicianin a hospital’s emergency department that werenot billed through the hospital were not capturedby the study.19 Although the BCC study coveredthe four Arizona border counties and MaricopaCounty’s own study provides additional relevantdata, it did not cover Pinal County (part of thePhoenix-Mesa metropolitan area) or another tencounties.

We judge that the Border Counties study, thatincludes uncompensated medical costs for mostof the population center of the state, and is basedon actual reported expenditures, provides a moreuseful basis for our estimate than that done bythe Urban Institute. If the BCC’s and Maricopa’s$240 million cost were updated to 2004 based ona significantly increased estimate of the numberof illegal immigrants (half-again as many) andhigher medical costs (7% higher) and for outlaysin the rest of the state (one-tenth higher), thatamount would increase to more than $400 millionper year for the state.

Legislation enacted in 1996 authorized funding topartially defray the unpaid costs of treating illegalimmigrants. An appropriation that fulfilled thatcommitment ceased in 2001. While legislation torestart that program has been introduced into thecurrent Congress, there is no offsetting funding atthe present time, and even while the program wasavailable, it only partially compensated local gov-ernments and medical facilities for their out-of-pocket expenses.20

FAIR

Other Studies

Other estimates of current uncompensatedmedical outlays vary widely. According to aspokesperson for the Protect Arizona Nowmovement, “Arizona’s hospitals report $1.4billion a year in losses to uncompensated

care.”21 That estimate does not differentiateas to the source of the uncompensated out-lays as it includes U.S. citizens and legal res-idents as well as illegal aliens.

The annual unpaid emergency hospital carecost of illegal immigrants in Arizona, as stat-ed by the Thunderbird Mexican Associationin its May 2003 report undertaken on behalfof the Mexican government on the“Economic Impact of The Mexico-ArizonaRelationship” was $31 million. TheThunderbird study used a factor from a studyin May 2002 by MGT of America, a nationalmanagement research and consulting firm,that estimated 24 percent of the total cost ofuncompensated medical outlays in Arizonawere due to illegal immigrants.

If the $1.4 billion per year estimate of totalunreimbursed outlays by the state’s hospitalswere decreased by the MGT factor of 24 per-cent — to reduce it to just expenses for ille-gal immigrants — it would result in annualuncompensated cost of $560 million per year.That calculation and the BCC estimate andthe University of Arizona study (an estimated

$140 million per year in 2000)22 all point tothe Thunderbird School estimate as improba-bly low.

10

The Costs of Illegal Immigration to Arizonans FAIR

In 1994, the Urban Institute estimated the illegalalien prisoner population to be 950 persons — sig-nificantly smaller than the state’s calculation of1,571 incarcerated aliens. The study’s techniquefor evaluating the illegal alien population inArizona probably undercounted that populationsignificantly because it included only thoseinmates that the INS was able to identify in itsrecords as illegal aliens. This eliminated all of theillegal aliens who had not been assigned an AlienRegistration number.

In fiscal year 1999, the state documented 901,191illegal alien detention days, i.e., the estimated

number of incarcerated illegal aliens times thenumber of days they were detained in state andlocal jails and prisons. This is the equivalent of2,469 prisoner years. By fiscal year 2002, the statedocumented 1,714,635 inmate days (4,698 prison-er years) by illegal aliens.

Assuming that the number of illegal alieninmates in Arizona has continued its upwardclimb at the same rate of increase, it is reason-able to estimate an illegal alien prisoner popula-tion in 2004 of 5,000 inmates. That is 5.25 timesthe size of the illegal alien prisoner populationused in the Urban Institute study.

Size of the Illegal A l i e nPrisoner Population

Uncompensated Law Enforcement CostUpdated Estimate

The Urban Institute calculated in 1994 that incar-cerating 950 illegal aliens cost the state $10.9 mil-lion (or $11,474 per inmate). This was less thanhalf the state’s estimate of 1,571 inmate/yearscosting $15,786 per year for a total of $24.8 mil-lion. Since the time of that study, the state’s illegalalien prisoner population has been steadilyincreasing, as noted above.

Under the federal State Criminal Alien AssistanceProgram (SCAAP), Arizona has received partialcompensation for these costs since 1995. For 1999,the state received $15,904,509 in compensation,which was 38.6 percent of the expenditure s ,which meant that $41.1 million in expenses werepaid by Arizona’s taxpayers. The per/prisoner

cost was calculated at about $16,700. Since thenthe amount of funds available for SCAAP reim-bursement has been cut back by Congress result-ing in the share of federal reimbursement beingsimilarly decreased. In fiscal year 2001, Arizonareceived SCAAP compensation of only 19.3 per-cent of the itemized illegal alien expenditures. By2002, the estimated cost per prisoner/year wasabout $17,900.

Assuming that the illegal alien inmate popula-tion in Arizona has continued to keep pace withtheir presence in the rest of the population (to5,000 prisoner/years), and the costs similarlyhave increased (to a per/prisoner cost of $18,000),that would result in an annual cost to the state of

The Urban Institute did not include any calcula-tion by the state of taxes paid by illegal immi-grants in its report. The study provided only theresearchers’ estimate of state and local income taxpayments plus sales and property taxes. Theseamounted to a total of $29 million. Included inthat total were state income tax collections (23.3%of the total), state sales taxes (43.2%) and state andlocal property taxes (33.5%). Sales taxes andproperty taxes will have risen with inflation andthe size of the illegal immigrant population alsohas risen steeply since the 1994 study.

Estimates of tax contributions are inherently diffi-cult because many illegal workers are working inthe underground economy, e.g., as day laborers orin sweatshops, and pay no income tax.Furthermore, some illegal workers pay less thantheir fair share of taxes by exaggerating theirnumber of dependents. However, some taxes are

being collected from illegal workers even if theywork in the “informal sector,” because they paysales taxes.

If the Urban Institute’s estimate of state and localtax collections rose in proportion to the rise in theillegal immigrant population, it would havereached about $220 million in 2004. Sales tax andproperty tax payments have probably kept upwith inflation, although income tax paymentsmay not have kept up with inflation because ofthe generally low wages earned by illegal alienworkers.

Updating for the increased illegal immigrantpopulation and inflation suggests that currentannual tax payments would be about $110 mil-lion in sales taxes, $85 million in property taxes,and $62 million in income taxes – for a total of$257 million.

11

The Costs of Illegal Immigration to Arizonans

$90 million. Even after the reimbursementsfrom the SCAAP program, most recently about$7 million, the unreimbursed portion borne bythe Arizona taxpayer would amount to at least$80 million per year.

This estimate is not far from an estimate by thegovernor’s office that Arizona is incurring costs of

about $72 million for imprisoning criminals with-out legal residency.23 That estimate may be a fewyears out of date. It should also be kept in mindthat the Bush Administration’s proposed budgetwould eliminate the SCAAP reimbursement pro-gram.

FAIR

Offsetting Ta xes Paid ByIllegal Immigrants

Other Studies

The 2001 study by the University of Arizona estimated $90 million in uncompensated incarceration

costs for illegal immigrants.24

The analysis of fiscal outlays and receipts asso-ciated with illegal immigration suggest a totalnet cost to Arizona taxpayers of more than $1 bil-lion per year. As also indicated, this includes out-lays for only education, medical care and incarcer-ation of illegal immigrants. It does not includenumerous other expenses borne by the Arizonataxpayer as a result of the extremely large pres-ence of illegal immigrants in the state. If otherexpenditures, such as school meal programs andspecial language instruction were included inthe estimate, it is clear thatthe net costs to Arizonataxpayers would be well inexcess of one billion dol-lars per year.

With about 1.8 millionhouseholds in the stateheaded by native-born resi-dents, the cost of illegalimmigration each year is inthe neighborhood of $717per household. This islower than the 1997 esti-mate by experts in aNational Academies ofScience (NAS) study thatfound the cost from illegal

immigration per household headed by a native-born citizen in California to be $1,178 per year.25As this NAS calculation included both legal andillegal immigrants, and legal residents would ingeneral have higher tax contributions and lowerusage of services, the average net cost estimatewould be higher for illegal aliens. EconomistJames P. Smith, principal author of the NASreport, cautioned that, “The undocumented tendto be less skilled, less educated. The two (groups)are very distinct.”26

12

The Costs of Illegal Immigration to Arizonans FAIR

I L L E G A L I M M I G R A N T S2004 OUTLAYS AND RECEIPTS

C a t e g o r y O u t l a y s R e c e i p t s Net Cost

E d u c a t i o n

Illegal Aliens $330,000,000 $330,000,000

Children of Illegal Aliens 480,000,000 480,000,000

Uncompensated Medical Care 400,000,000 400,000,000

Incarceration 80,000,000 80,000,000

Tax Payments 257,000,000 -257,000,000

To t a l $1,290,000,000 $257,000,000 $1,033,000,000

Balancing the Outlays for and Receiptsfrom Illegal Immigrants

The Arizona state government tried to hold thefederal government accountable for the costs ofillegal immigration when it joined other states insuing the federal government in 1994. The law-

suit was, however, rejected in federal court on thebasis that it was a political rather than legal issue,and the states should pursue their claims inCongress.27

Cost Av o i d a n c e

13

The Costs of Illegal Immigration to Arizonans

Despite the lack of success in court, the significantfiscal costs to Arizonans associated with illegalimmigration are not inevitable. While the federalgovernment has the primary responsibility forassuring that foreigners who enter the countryand reside here do so legally, the state and localgovernments have a role to play that can eitherdiscourage or encourage illegal immigrant settle-ment in the state. State and local policies caneither facilitate or hinder federal immigration lawenforcement efforts.

While the Border States should not be expected tobear an unfair burden that flows from the federalgovernment’s failure to exclude unauthorizedentries and overstays by aliens, it would be simi-larly unfair that those states have their expensesunderwritten by taxpayers across the country ifthey have adopted laws or policies through theirgovernment that encourage the settlement of ille-gal immigrants in their state.

Examples of state and local policies that compli-cate federal immigration law enforcement effortsand encourage illegal immigrant settlementinclude the following:

n Issuing state driver’s licenses and voter regis-tration cards to illegal aliens;

n Extending public assistance program eligibili-ty to illegal aliens;

n Offering in-state tuition to illegal alien stu-dents;

n Adopting sanctuary or don’t-ask-don’t tellpolicies that shield illegal aliens from immi-gration authorities;

n Providing governmental support for or toler-ance of formal or informal hiring centerswhere illegal aliens seek day-labor jobs, e.g.,the Macehualli center in Phoenix;

n Accepting foreign government-issued identitycards as establishing residence in Arizona.

In Arizona, the state has not overtly undertakensuch policies, but some of these policies have beenadopted at the local level, such as recognizing theMexican matricula consular for governmental pur-poses in places such as Phoenix and Mesa, andauthorizing day laborer hiring centers that facili-tate the employment of illegal aliens, as noted inthe case of Phoenix. Furthermore, anecdotalinformation indicates that the state, by maintain-ing a form of 'don't ask, don't tell' policy is con-doning the admission of illegal aliens in highereducation schools at in-state resident tuition ratesand perhaps is even granting scholarship assis-tance to those illegal aliens.

Examples of state and local government practicesthat would discourage illegal alien settlement andfacilitate federal enforcement of the immigrationlaw include the following:

n Requiring the collection and verification ofSocial Security numbers for the issuance ofu n restricted driver’s licenses and identitycards;

n Issuing restricted driver’s licenses to alienslegally present in the state so that the licenseexpires when the authorized stay in the UnitedStates expires;

n Refusing to accept the validity of driver’slicenses from states that allow illegal aliens toobtain the other state’s driver’s licenses.

n Entering into a cooperative agreement withthe federal immigration authorities for train-ing local law enforcement personnel in immi-gration law enforcement so that law breakerswho are identified as illegal immigrants can beturned over to the immigration authorities forremoval from the country rather than beingreleased back into society;

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n Requiring government contractors to partici-pate in the Basic Pilot document verificationsystem for all of their new employees workingon government contracts.

Of these policies, Arizona implements the driver’slicense procedures designed to avoid putting thisvital identity document in the hands of illegalaliens, procedures to limit driver's license foraliens legally in the country to the period of valid-ity of their visa, and non-recognition of driver'slicenses issued in states that do not require a per-son to be lawfully present in the United States.

Arizonans have a right to expect their national aswell as locally elected representatives to be work-

ing to alleviate the burden of illegal immigration.To simply convert illegal alien students or work-ers from illegal alien status to legal worker or res-ident status with an amnesty is not a valid way tolessen the problem. Rather, experience with the1986 amnesty for illegal aliens indicates thatrewarding illegal aliens only encourages others tosee ignoring our immigration law as a successfulavenue to gain a new and better life in our coun-try. This lesson is not surprising. But Arizona’selected representatives should recognize that theyowe it to the state’s citizens and legal residents totake actions to relieve them of this unwanted bur-den.

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The Costs of Illegal Immigration to Arizonans

1 2002 Yearbook of Immigration Statistics, DHS Office of Immigration Statistics, Oct. 2003.2 “Study shows New Mexico residents pay disproportionate costs of illegal immigration,” Press Release New Mexico

State University, Feb. 8, 2001.3 David Simcox, “Measuring the Fallout: The Cost of the IRCAAmnesty After 10 Years,” Center for Immigration Studies,

May 1997.4 See H.R.2848 by Bob Filner - “to provide for Federal custody and Federal payment of costs of emergency ambulance

and medical services for aliens illegally attempting to enter the United States,” introduced: July 24, 2003, and referredto the House Committee on the Judiciary and Energy and Commerce, and H.R.1515 by Jeff Flake - “to provide for reim-bursement for unreimbursed costs of emergency medical care for aliens paroled into the United States for medical rea-sons,” introduced: March 31, 2003, and referred to the House Committee on Energy and Commerce.

5 According to 2001 Census Bureau estimates, approximately 4,400 illegal immigrant households have at least onem e m b e r fraudulently enrolled in the AHCCCS program. “Arizona Uprising,” www. F ro n t P a g e M a g a z i n e . c o m ,October 30, 2003.

6 “Currently, AHCCCS [the Arizona Health Care Cost Containment System] does not require any proof of citizenship;applicants simply check a box stating they are legal residents and automatically qualify for welfare. Rachel Alexander,“Protect Arizona Now: A Moderate Solution That Fixes Immigration Instead of Preventing It,” March 18, 2004,http://www.american-partisan.com/cols/2004/alexander/qtr1/0318.htm.

7 Steven Camarota, “Back Where We Started: An Examination of Trends in Immigrant Welfare Use Since Welfare Reform, Center for Immigration Studies, March 2003.

8 In a 1992 study of the costs of immigration, a Rice University economist calculated probable costs based on oneAmerican out of work for every four illegal residents. Factoring in unemployment compensation, uncompensatedmedical outlays, food stamps and other assistance, he calculated that the costs would be about $2,500 per year per per-son. Huddle, Donald, “The Net Costs of Immigration to California” Nov. 4, 1993, published by Carrying CapacityNetwork, Washington, DC.

9 Along with the steady rise in the illegal alien population and the use of Arizona as a principal transit route into theUnited States, the crime rate in Arizona has similarly risen to the point that in 2000 the state was found to have thenation’s highest per capital crime index. The state in 2000 had the nation’s highest rate of property crimes, the highestrate of vehicle theft, and the 2nd highest rate of larceny theft. The state also ranked above the median among the statesfor burglaries (5th), murders (9th), robberies (15th), and aggravated assaults (15th). Only for forced rapes was Arizonalower than the median (28th). Since 2000 the rising crime rate has continued to outpace the increase in the populationrate. The overall crime index in 2002 had increased by 9.6 percent with increases in every crime category except rape,and with the largest increase (25.5%) in theft. Federal Bureau of Investigations, Uniform Crime Reports(http://www.fbi.gov/ucr/ucr.htm).

10 The amount of remittances currently being sent abroad may be estimated to be about $200 per month per illegal resi-dent. That would suggest that the amount of remittances sent abroad by Arizona’s illegal alien population would bein the neighborhood of about $900 million per year. Mexico claims that it is receiving about $12 billion annually inremittances. The source of these remittances is largely from an illegal resident population of roughly 5 millionMexicans in the United States.

11 “Illegal Immigration Strains Services in Arizona,” New York Times, April 11, 2001.12 In addition, FAIR believes that children born to illegal aliens should not be considered U.S. citizens. We believe that the

prevailing interpretation of the U.S. Constitution’s 14th Amendment that confers this citizenship is wrong because itignores the “subject to the jurisdiction thereof” clause of the Amendment.

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13 “By including children, proposal may increase strain on schools, health care,” op. cit.14 A survey of the illegal immigrant population legalized in the 1986 IRCA amnesty found that 74 percent of males and

72 percent of females were between the ages of 20-39. Report on the Legalized Alien Population, Immigration andNaturalization Service, March 1992.

15 “Breaking the Piggy Bank: How Illegal Immigration is Sending Schools into the Red,” Federation for AmericanImmigration Reform, August, 2003.

16 “Fiscal Impacts of Undocumented Aliens: Selected Estimates for Seven States”, The Urban Institute, September 1994.17 “For example, illegal immigrants this year will cost Arizona an estimated $140 million for health care, $100 million for

education and $90 million for criminal justice expenses. … in fiscal 1999, according to a University of Arizona study.”Economic impact hotly debated, The Arizona Republic, Aug. 26, 2001.

18 “Shadegg, delegation seek immigrant cost care data,” The Arizona Republic, February 07, 2003.19 “States might get help with immigrant care,” AMA Press Release, Oct. 21, 2002, http://www.ama-assn.org/amed-

news/2002/10/21/gvsa1021.htm.20 See H.R.2848 and H.R.1515 in the 108th Congress.21 “Arizona Uprising,” op. cit.22 Economic impact hotly debated,” op. cit.23 Le Templar, “What price illegal immigration?” East Valley Tribune, undated.24 “Economic impact hotly debated,” op. cit.25 California was the only southwestern state for which a separate calculation was made in the study. “The New

Americans: Economic, Demographic, and Fiscal Effects of Immigration,” National Academies of Science, 1997,Washington, DC.

26 Economic impact hotly debated,” op.cit.27 “Texas Sues US Over Illegal Immigrant Costs,” Reuters, August 3, 1994. “Texas is Latest to Sue US for Cost of Illegals,”

San Francisco Chronicle, August 6, 1994.

This report was prepared by Jack Martin and Ira Mehlman.

TM

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