Illinois tax policy and the ability to help migrants

Crisis management is becoming a real focal point for the public sector. In 2023 alone, the U.S. experienced 28 different weather disasters that each caused over $1 billion in damages, and they included everything from wildfires, floods and cyclones to Category 5 hurricanes. Heck, from 2019 through 2023, Illinois averaged over six such events annually all by itself. Then there’s the once-in-a-century, COVID-19 pandemic that wrecked the economy for a couple of years and also caused the deaths of 1,172,229 Americans.

There’s a very different crisis confronting Illinois today. It involves providing housing, food, health care and other assistance to the 35,000 plus migrants who have arrived in the state over the last two years. It’s different because it wasn’t caused by an act of nature. Instead, it involves the immigration to America of folks looking for a better life.

The vast majority of migrants — also known as “people” — came here legally. They’re seeking asylum to escape Venezuela’s politically repressive government and an economy in such poor shape that around half the population lives in poverty. For context, Venezuela has a GDP of $97.68 billion, or just $3,690 per capita. That not only pales in comparison to the U.S., it pales in comparison to Illinois, which has a GDP north of $1 trillion overall and $61,713 per capita.

In many respects, the current migrants are similar to the millions of Irish and Italian individuals who flocked to America to escape poverty and political oppression from the mid-1800s through the Great Depression. And who made our nation stronger by all accounts.

Until recently, the migrant issue was viewed as a Chicago problem, but things they are a-changing. Migrants are currently seeking haven in communities spanning from Oak Park, Wilmette, Naperville and Elgin to Urbana. As more communities have to cope with this challenge, opinions on what to do have become, in some cases, significantly less sympathetic. The reason for this is simple: money. To state the obvious, it costs taxpayer dollars to redress any crisis, and for some that’s a bridge too far when it comes to assisting migrants.

Indeed, a recent NY Times article reported that Josh McBroom, a Naperville City Council member, didn’t believe “any public funds should be used to support asylum-seekers.” A number of Republican state legislators share that viewpoint, arguing that Illinois should use its tax dollars to care for its own citizens rather than help migrants.

This opposition to supporting migrants raises an interesting fiscal policy question: can the state afford to subsidize the cost of assisting migrants? Let’s look at some numbers. There are around 35,000 migrants in Illinois — a state with a population north of 12.6 million. Which means if all the migrants stayed in Illinois, our population would increase by less than a rounding error, so one would assume the answer is yes.

Then there’s the evidence. A recent study published by the Wharton Business School at the University of Pennsylvania considered the differential between taxes paid and services consumed by immigrants on a net basis across all units of government. The study found that immigration has a “net positive effect on combined federal, state, and local budgets.” So the good news is short-term costs should be more than covered by long-term benefits.

The problem is Illinois’ tax system doesn’t generate enough revenue growth to cover the cost of maintaining the same level of public services from one fiscal year into the next. That’s no bueno, because over 94% of all state spending on services goes to the core areas of education, health care, human services and public safety. Which means state decision makers already need to reform revenue policy so it can generate the capacity to fund core services sustainably over time. That will ensure Illinois can also do what’s right from both a moral and fiscal standpoint: assist migrant families today — so they can help build a better Illinois tomorrow.

• Ralph Martire is Executive Director of the Center for Tax and Budget Accountability, a fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University. rmartire@ctbaonline.org