Credit agency warns of financial pressure on Denver from serving immigrants

Denver was one of three cities highlighted for impending financial stress due to rising costs from accommodating migrants and asylum seekers, according to an analysis by a leading financial organization.

However, the report by Standard & Poor’s Global Ratings stated Denver’s financial status should be stable for the short term.

“Although we view the evolving situation as a budgetary challenge necessitating ongoing budgetary adjustments for the current fiscal year and beyond, we consider Denver's historically very strong reserve and liquidity cushion as a positive credit factor to navigate near-term pressures,” the report stated.

Denver, Chicago and New York City were highlighted by the organization as they were three cities receiving the largest number of migrants and asylum seekers after they crossed into the U.S. along the country’s southern border in recent years. The increase strained city budgets in the three areas.

“In December 2023, the immigration court backlog reached 3 million pending cases, an increase of 1 million from 2022, with almost 2 million new proceedings filed in 2023,” the report stated. “If this issue remains significant enough for long enough, the increase in costs and social service requirements could affect states' and local governments' credit quality.”

Texas began transporting new arrivals out of the state in 2022 and approximately 83,600 were sent to the three cities, according to the report.

Denver, rated AAA and stable by the organization, received the highest number of migrants per capita than any other city not on the border. Approximately 38,400 people received services from the City and County of Denver since the end of 2022, according to the report.

“To date, total costs for migrant support are estimated at more than $42 million, an expense we expect will continue to rise, particularly as other communities throughout the metropolitan area are unable or unwilling to provide significant support to the city,” the report said.

Cities in the Denver area have stated they’re not financially able to assist with migrants as they begin seeking to move outside the metropolitan area.

On Wednesday, Denver Mayor Mike Johnson announced the closure of four shelters, one per week for the next month. Earlier this month, Denver’s public schools reported as many as 250 new students per week, costing an additional $837,000 to support the students.

Personnel costs comprise approximately 40% of Denver's expenses to serve the population, followed by facilities (25%). More than 3,600 individuals are currently in shelters as Denver is operating seven non-congregate shelters for newcomers and two for migrants experiencing homelessness.

The report said Denver received $3.5 million in support from the state and $13.8 million in federal aid to address the situation. However, the organization warned more federal government money probably won't be allocated.

“Given current political dynamics in Washington D.C. and the upcoming presidential election, we do not consider additional federal support likely,” the report said. “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.”