Three major U.S. cities — New York, Chicago and Denver — have been under financial pressure, according to a report by LatinTimes due to the continued arrival of migrants crossing the country's southern border. Texas Gov. Greg Abbott's administration has been transporting thousands of these migrants to these cities as part of Operation Lone Star.

The S&P Global report warns that this situation is putting significant pressure on municipal budgets and, consequently, on the creditworthiness of cities.

“As the Greg Abbott administration in Texas continues implementing its "Lone Star" operation, busing thousands of migrants crossing the U.S. southern border to some of the countries largest cities, S&P Global warned that a lack of support from state and federal governments, their budgets could be strained and their credit quality come under pressure. […] The agency highlighted that more than 80% of the some 100,000 migrants Texas has bused to other parts of the country have been taken to New York City, Chicago and Denver”, according to the Latin Times report.

In New York, the arrival of more than 175,000 migrants and asylum seekers since April 2022 has generated substantial costs. The city has had to significantly revise its spending estimates, anticipating sizable increases in the coming fiscal years. However, measures have been put in place to reduce these costs, such as requiring single migrants and families to seek shelter after a certain period. Still, S&P Global anticipates continued challenges in balancing the budget despite cost-cutting measures.

Chicago also faces similar challenges, with nearly 40,000 migrant arrivals since August 2022. While the city has a limited budget to deal with this situation, it relies on grants from the state and federal governments to fill the financial gap. The lack of contingency plans for unbudgeted expenditures adds to the uncertainty about the city’s financial situation, especially considering its underfunded pension programs.

Denver, although it has a smaller population, is the per capita destination for the most migrants among the three cities. With estimated costs of $42 million to support migrants, the city faces mounting financial pressures. While it has a strong reserve and adequate liquidity, excessive costs related to migrant support programs can result in an operating shortfall.

The report concludes by highlighting uncertainty regarding additional financial support from the federal and state government, given the current political dynamics and the upcoming presidential elections. Cities on the front lines of migrant and asylum seeker flows may have to deal with rising costs without guarantees of additional revenues to offset these expenses, which poses a significant challenge to their municipal finances and creditworthiness.