Bernice Ross

President-elect Donald Trump has pledged to defund sanctuary cities if they fail to cooperate with the deportation or incarceration of up to 3 million immigrants who are criminals or have criminal records. Mayors in sanctuary cities are fighting back saying that they will resist Trump’s efforts. The fallout could have far-reaching consequences that few seem to have considered.

According to The Economist, “There is no specific legal definition for what constitutes a sanctuary jurisdiction but the term is widely used to refer to American cities, counties or states that protect undocumented immigrants from deportation by limiting cooperation with federal immigration authorities.”

Reince Priebus, Trump’s new chief of staff, said that Trump is “looking into” cutting millions of funding to so-called sanctuary cities on Day 1 of his presidency. Priebus went on to say that sanctuary cities can no longer continue to have it both ways – if they choose to ignore federal law they can no longer expect to receive federal money.

Despite this threat, mayors of the country’s sanctuary cities have vowed to fight Trump with whatever means available. New York’s Bill de Blasio, Chicago’s Rahm Emanuel, Los Angeles’ Eric Garcetti, and San Francisco’s Ed Lee have all vowed not to back down. DeBlasio went as far as to say he would destroy a database with undocumented immigrants with city identification cards before handing such records over to the Trump administration. Sanctuary cities in Massachusetts include Cambridge, Somerville, Chelsea, Orleans, Northampton and Springfield. Boston has the foundation to become a sanctuary city but has not yet specifically declared itself so.

Hit Their Pocketbooks

Trump made it clear during the campaign that he would use money as a primary tool to achieve his goals, whether it is getting Mexico to pay for the wall, placing tariffs on U.S. companies who send jobs outside the U.S., reducing foreign aid or defunding sanctuary cities. In terms of sanctuary cities nationwide, Bloomberg reports that the president-elect has $650 billion in federally funded leverage.

According to CNN Money, New York City could lose close to $10.4 billion in federal funds. That’s approximately 12.5 percent of the city’s balanced budget of $83.46 billion. This reduction would wipe out the city’s reserves of $4.0 billion in the Retiree Health Benefits Trust Fund, $1.5 billion in the General and Capital Stabilization reserves, as well as covering a projection of reduced revenues from taxation of $127 million, still leaving over a $4.5 billion shortfall to balance the budget.

Rahm Emanuel of Chicago proposed a $9.3 billion budget for 2017, $1.3 billion (14 percent) of which is from federal grants. Approximately 300 other sanctuary cities could face similar shortfalls if they want to maintain their sanctuary city status.

The Mayors’ Dilemma 

To illustrate how devastating cutting off federal funding could be, consider how these funds are currently being used in New York City. Much of the federal funding goes to the Department of Social Services (Food Stamps, welfare, health care and other benefits), the New York City Housing Authority (Section 8 Housing), and the Administration for Children’s Services (child welfare, foster care, and investigation suspected child abuse and neglect). These are all essential services that no rational person wants cut.

The challenge for DeBlasio is how to cover a $10.4 billion shortfall. He would have to raise revenues (probably through tax increases) by $1,237 per person per year, or approximately $4,950 for a family of four.

City Controller Scott Stringer told The New York Daily News after an analysis of the city’s funds that federal funding provides about 9 percent of the city’s budget and that cutting the funds would be “devastating.” However, he added, “We are a city that welcomes immigrants – we don’t turn people away based on where they’re from or what language they speak, and that must not change.”

Potential Fallout 

What are some of the ramifications that sanctuary cities may face? Fallout could include:

• Section 8 landlords could risk default if they are unable to pay their mortgage due to discontinuation of tenant subsidies.
• Without Section 8 subsidies, tenants could be forced from their homes and possibly become homeless.
• Increased property taxes could force homeowners who are struggling out of their homes or into foreclosure.
• Increased taxes would also make it harder for first-time buyers to purchase.
• The city’s pensioners in places like New York City could be at risk. Disruption of pension benefits could cause pensioners to lose their home, to forego basic services or to be unable to pay for needed medications.
• Businesses that serve these groups could go out of business.
• Increased taxes could cause more individuals and businesses to leave the area. This would reduce the tax base, which could require even higher taxes to cover the shortfall.

Like it or not, Trump isn’t going to back down on his signature campaign issue. The question is what the mayors of sanctuary cities will do when they face putting their most needy constituents at risk.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author. She may be reached at Bernice@RealEstateCoach.com.