Fiscal Impact Statement Shows AZ Copycat Law Could Cost Kentucky $40 Million

Yesterday, Kentucky legislative staff released a fiscal-impact statement on Senate Bill 6 — the Arizona copycat law that’s working its way through the state’s legislature. According to the statement, Senate Bill 6 would cost Kentucky a net $40 million a year in court, prison and foster-care costs. Yet, the Kentucky senate voted 24–14 last week to pass the bill without knowing its cost. The Lexington Herald Leader reports:

The Pew Hispanic Center’s best estimate on Kentucky’s illegal immigrant population is 50,000, the aides said. For the purpose of the cost estimate, the aides assumed that one-third of the men and one-fourth of the women now here illegally could be convicted under the law. Those jailed could serve an average of 60 days at a cost of $33 a day.

Overall, Kentucky could face $90 million a year in new costs for local jails, state prisons, the foster-care system (for the children of jailed parents), the Administrative Office of the Courts and public defenders, the aides said.

This sum does not include additional police costs or lost revenue from the approximately two-thirds of illegal immigrants in the work force, many of whom pay sales and income taxes, the aides said. Against that, Kentucky could save $50 million a year in education costs as illegal immigrants’ children are deported or otherwise leave with their families and in reduced services through Medicaid and local health departments, the aides said.

The net cost to Kentucky would be $40 million.

The bill’s sponsor — state Sen. John Schickel — admitted that “It does look like serious money.” However, he rejected the findings, stating, “But these are estimates, and quite frankly, I don’t agree with these estimates.” According to Schickel, “this assumes that law enforcement is going to enforce it to the maximum everywhere, and the bill leaves it open to each jurisdiction’s individual discretion.” Schickel also noted that as Kentucky gets a reputation for being less friendly to undocumented immigrants, fewer of them will come, which will drive a decrease in some of the costs of the bill.

Advertisement

Schickel may be right that the costs mentioned will go down as the state kicks out all of its undocumented immigrants and dissuades others from coming. However, it seems pretty irresponsible to propose a law that could cost taxpayers $40 million for one year alone as Kentucky faces a $780 million budget shortfall.

Also, as was noted in the report, it doesn’t take into account how much it would cost Kentucky in lost tax revenue and business activity. A 2008 study estimated that, if Kentucky successfully removed all of its undocumented immigrants, it would lose $1.7 billion in economic activity, $756.8 million in gross state product, and approximately 12,059 jobs. Meanwhile, Arizona’s Hotel and Lodging Association reported a combined loss of $15 million in lodging revenue due to meeting cancellations just four months after its immigration bill’s passage due to an economic boycott that was waged against the state. The actual lost lodging revenue from these cancellations could top $45 million. Kentucky is opening itself up to being the target of a similar backlash.

Finally, Kentucky’s law will probably invite litigation. The court costs included in the $40 million cost estimate only seem to include the dollar value associated with the legal process of convicting undocumented immigrants who break the new law. It doesn’t include the price of litigation over the law itself. Arizona spent over $1 million in 2010 alone to defend SB-1070 and the state still has a long way to go before the legal issues are resolved. Farmers Branch, a small town of 30,000 people, has spent over $3.2 million in defense of its immigration law and the Pennsylvania city of Hazleton is on the hook for the $2.4 million it has acquired in attorneys fees. The city’s mayor predicted that costs could rise at least another $2 million if it loses at the federal appeals court level.