Bus after bus, major cities far from the border are starting to buckle under budgetary pressures of the nation’s migrant crisis. S&P Global Ratings is monitoring the credit health of New York, Denver and Chicago as they face sheltering tens of thousands of asylum-seekers.
“The issue will destroy New York City,” Mayor Eric Adams said last year.
New York
For the fiscal year ending June 30, 2023, New York City spent $1.5 billion in asylum-seeker costs. In the current fiscal year, which ends June 30, 2024, the city expects costs to nearly triple.
The city budgeted $4.2 billion to care for incoming migrants, most bused from the border. In fiscal year 2025, that category will increase to $4.9 billion.
To offset costs, Adams announced 5% budget cuts for every city agency, from education to public safety.
“It’s really the cities that are on the hook to cover the majority of the expenses,” said Felix Winnekens, lead analyst of public finance for S&P Global Ratings.
“New York City is in a bit of a unique situation because of its right to shelter,” Winnekens told Straight Arrow News. “So basically, anyone in the city – could be a homeless person, could be a migrant or an asylum-seeker – that needs shelter, the city has to provide shelter. That’s part of a consent decree that the city entered into back in the 1980s.”
Adams has moved to suspend aspects of right-to-shelter while the city currently houses more than 60,000 asylum-seekers.
The state, which supports Adams’ request to suspend, has had to dip into reserves to help shoulder costs, Winnekens said.
Chicago
In Illinois, a battle is brewing between governments. The state, Cook County and Chicago officials estimated it will cost $321 million to support migrant operations through the end of the year.
While the state and Cook County have pledged $250 million, Chicago Mayor Brandon Johnson has reportedly backed away from the city committing to $71 million to cover the shortfall.
“I don’t believe anyone in Chicago is questioning my commitment to this mission,” Johnson said.
According to the city, there are currently more than 12,000 migrants in Chicago shelters as of Feb. 20.
Denver
Denver is facing a $180 million gap in the city budget that must be filled to shelter existing and incoming asylum-seekers.
“Without any federal support, without any work authorization, without changes to policy, we are going to have to make changes to what we can do in terms of our city budget,” Denver Mayor Mike Johnston said earlier this month. “This is a plan for shared sacrifice.”
The Department of Motor Vehicles and Parks and Recreation are the first areas in the city to see cuts, but they won’t be the last, Johnston warned.
In 2023, the city received more migrants per capita than any other city in the nation.
A national problem without a national response
Unlike the federal government, most cities and states are required to pass balanced budgets. When migrant costs surge, money has to be cut from other services to make ends meet.
“We do not see any near-term pressure on the ratings, but I think it’ll be a continued struggle for those cities to find the right balance between cutting expenditures and making ends meet to address the increase in asylum-seeker costs,” Winnekens said.
Meanwhile, Texas Gov. Greg Abbott has vowed to continue busing migrants to these cities, saying they’ve seen only a fraction of what overwhelmed Texas border towns face daily.
While Abbott criticized the federal government’s border policies, the Democratic mayors of these affected cities also took issue with the federal response.
“We’re getting no support on this national crisis,” Adams said last year.
With Congress at a perceived impasse, Winnekens said cities could be on their own to shoulder costs at least through the election. While New York, Chicago and Denver have faced the brunt of migration after border towns, S&P is also eyeing Washington, D.C., Boston, Los Angeles and San Francisco as asylum-seekers seek out more big cities.
