(Bloomberg) -- The influx of asylum seekers and other migrants crossing the southern US border is creating budget stress for three of the nation’s largest cities, according to S&P Global Ratings.

New York City in particular, along with Chicago and Denver, are revising upward their estimates for spending related to asylum seekers, and without more state and federal government support, these costs could strain budgets and pressure credit quality, S&P strategists led by Felix Winnekens said in a report published Tuesday. 

Since 2022, Texas has shipped 100,000 migrants to cities outside of the state, including a combined 83,600 that were sent to New York City, Chicago and Denver. The mayors of the three cities are now asking their state governments as well as the Biden administration to help alleviate the fiscal burden caused by the sudden influx of migrants. 

“Given current political dynamics in Washington D.C. and the upcoming presidential election, we do not consider additional federal support likely,” the strategists wrote. “Therefore, cities on the front line of migrant and asylum seeker inflows will have to face the uncertainty of rising costs without a guarantee of revenues to offset the expenditures.”

While states and localities located along the border have long faced spending pressures related to migration, the decision by some states to transfer asylum speakers elsewhere is causing unanticipated budget problems.

“In December 2023, the immigration court backlog reached 3 million pending cases, an increase of 1 million from 2022,” the report said. 

Spending Skyrockets

New York City spent $1.45 billion in fiscal 2023 on migrant costs, and expects to spend a combined $9.1 billion housing migrants in fiscal years 2024 and 2025. 

Chicago spent $275 million on such services in fiscal 2023, though the city’s 2024 budget only allocated $150 million toward the effort to house undocumented new arrivals. 

Denver paid approximately $46 million in fiscal 2023 for migrant support services but the city has already identified significant cost overruns related to its migrant support programs, which could contribute to an operating deficit.

“As the number of migrants and asylum seekers rises, the budgetary strain on these cities has become increasingly visible,” the S&P strategists wrote.

While New York, Illinois and Colorado have provided additional support to their respective cities, the federal government’s response has been more muted.

 

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