Effects of the Surge in Immigration on State and Local Budgets in 2023

In this report, the Congressional Budget Office estimates how the surge in immigration that began in 2021 affected state and local budgets in 2023. In addition to estimating the direct effects of the surge, CBO calculated an alternative measure that includes the potential broader or longer-term effects and costs that were borne without adding to spending—such as crowding in public schools and public transportation systems. By either measure, the surge imposed a net cost.

• Direct Effects. The surge led to a direct increase in revenues of $10.1 billion, primarily from sales taxes, and a direct increase in spending of $19.3 billion, chiefly for public elementary and secondary education, shelter and related services, and border security. The result was a direct net cost of $9.2 billion in 2023, amounting to 0.3 percent of state and local spending (net of federal grants-in-aid).
• Potential Effects. In addition to those direct effects, CBO's alternative measure accounts for expected increases in property tax revenues, additional tax revenues from greater economic activity, and nonbudgetary costs associated with greater demand for government services. By that measure, the surge in immigration had the potential to increase revenues by $18.8 billion and spending by $28.6 billion, resulting in a potential net cost to state and local governments of $9.8 billion in 2023.