NYC Gazette

Since 2022, more than 182,000 people fleeing economic and political crises in South America have been bused by the State of Texas to New York and other Northeastern cities after crossing into the United States from Mexico.

While historic tides of immigration bring economic expansion and innovation, they also test the finances of local governments and school districts, according to a recent paper by Travis St. Clair of NYU Wagner. Mining history for insights on our current moment, St. Clair, an associate professor of financial management and public service, looked back at the Mariel Boatlift of 1980, when some 125,000 refugees arrived by boat in southern Florida from Cuba. Miami-Dade County officials responded with shelter, food supplies, medical care, and other emergency services—all unanticipated expenditures—while the region’s student population grew, creating a more lasting budgetary impact.

Per-pupil education costs, he found, grew in Miami in the aftermath of the Boatlift, persisting for at least 10 years. And in the wake of the sudden increase in students, the Miami-Dade school district raised property taxes while Florida state transfer payments went up accordingly.

To St. Clair, whose work deals with fiscal challenges in the public sector, the Boatlift example is instructive because a number of small and large Northeast cities are experiencing heavier-than-expected migrant influxes from the US southern border as asylum seekers have been redirected by Texas Governor Greg Abbott because of his opposition to controversial federal border policies.

Some of the cities, like New York, have asked for increased federal assistance—largely to no avail—to help accommodate the inflow and an easing of federal rules preventing migrants from applying for and gaining legal employment readily.

The Mariel Boatlift unfolded over seven months 44 years ago amid intensifying job and housing shortages in Cuba as well as improving Cuban-US relations under then-President Jimmy Carter. Fidel Castro’s announcement that anyone wanting to emigrate was free to board boats at the Port of Mariel touched it off, catching Key West, Miami and the US Coast Guard by surprise.

Making international headlines, the episode would not be the last such mass exodus to test local governments’ financial and operational abilities as well as their fiscal relationships with state and federal partners. After a 1991 coup in Haiti, for example, a US-led effort abruptly turned back a rickety flotilla carrying thousands of asylum seekers; almost 11,000 of the more than 38,000 refugees in all eventually were allowed to apply to stay permanently in the US.

In another instance gang violence and intimidation COVID-19 pandemic created migration pressures in Guatemala that generated a fivefold increase in Guatemalans fleeing to the US border from 2020 to 2022.

Improving our understanding of migration surges' effects on local government finances requires an “understanding of short- and long-run fiscal impacts," particularly "the heterogeneity of those impacts on governments at different levels within a federalist system,” St. Clair writes.

While he emphasizes that immigration's economic benefits and its impact on workers' wages continue to be important priorities for researchers working on this politically charged topic St. Clair argues that budgetary implications for governments are also worthy of study.

NYU News spoke with him about his paper “The Fiscal Effects of Immigration on Local Governments: Revisiting The Mariel Boatlift.”

What drew you to examine The Mariel Boatlift?

"Immigration has obviously been a very salient issue for New York City over the last few years," said St. Clair "and it’s made me curious to understand some policy issues better." While there’s significant academic literature on immigration there are few quantitative case studies especially examining fiscal implications for local governments receiving migrants."

"The Boatlift has been written about extensively partly because it's such a great natural experiment," he added "but these papers didn’t really ask questions I was interested in namely what happened to affected local governments' budgets."

How did you examine financial pressures? What did you discover were major drivers?

"I tried understanding revenues/spending absent The Boatlift compared them against actual outcomes," explained St.Clair constructing synthetic comparison groups based on weighted averages similar municipalities—a method used by other scholars."

"Short-term costs aside major fiscal impacts were school spending," he continued noting per-pupil education costs rose approximately nine percent "a substantial effect given higher associated costs educating limited English proficiency students."

Were any findings unexpected?

"I don’t think my results are surprising given known fiscal effects though per-pupil cost increases might be larger expected," said St.Clair prior research showing immigrant children's education is significant contributor."My paper validates modeling done providing concrete estimates both cost drivers financing mechanisms."

How does The Mariel Boatlift influx compare with NYC's asylum seeker crisis?

"I’m not an expert NYC's current situation but available information suggests family numbers far exceed single adults/adult families," observed St.Clair citing March 2024 figures showing approximately thirty-six thousand students enrolled temporarily NYC public schools."This represents four percent total students smaller shock compared Miami-Dade's six-seven percent immediately following The Boatlift hence extensive study interest."

Is it possible drawing broader conclusions regarding immigration's financial impact overall?

"It’s hard generalizing many challenges stem housing shortage/right-to-shelter requirement so far city stressed budgetary challenges food/shelter rather than education," noted St.Clair highlighting healthcare Medicaid importance some states providing coverage regardless status age profile significance affecting policy response cost distribution across city/state/federal levels."

Do long-run economic benefits offset short-term strains obviate need direct federal assistance?

"This question involves political/moral considerations requiring assumptions depending precisely 'offset'," remarked St.Clair emphasizing large immigrant inflows place fiscal pressure especially children even supportive acknowledging long-term benefits addressing arising challenges remains crucial ensuring equitable geographic distribution."