S&P: Sanctuary cities won't see ratings dip with Trump order

AP News
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Posted: Mar 30, 2017 7:32 PM

CHICAGO (AP) — If sanctuary communities that refuse to cooperate with immigration authorities lose federal funds under President Donald Trump's executive order, their credit ratings aren't likely to change, a major rating agency concluded Thursday.

Standard & Poor's examined the financial health of over 100 cities and counties that have designated themselves sanctuaries, along with a snapshot of the 10 biggest U.S. cities. Its report said the types of federal grants that could be withheld make up tiny portions of the communities' budgets.

"Local governments would likely not experience significant budgetary pressure and all other things being equal, their credit quality would likely remain largely unchanged," according to the report.

Assessments by rating agencies are a strong fiscal measure for financial doubts municipalities may have, and S&P's findings appeared to weaken the Trump administration's warnings to sanctuary cities.

The Republican president signed an executive order in January vowing to cut federal grants for sanctuary communities if they refuse to help with efforts to find and deport immigrants in the country without legal permission. Attorney General Jeff Sessions issued fresh threats this week.

Most federal funds are exempt from Trump's order, leaving discretionary grant programs. S&P reviewed grants from the Department of Justice and the Department of Homeland Security, believed to be the most likely candidates. Examples of grants at stake include those funding to help crime victims or pay for police body cameras.

There are an estimated 200 sanctuary cities and counties nationwide. They're generally defined as areas that limit cooperation with federal immigration agencies. S&P maintains ratings on 133 of them.

Its analysis of 10 sanctuary cities, including New York, Detroit and Seattle, showed that DHS and DOJ discretionary grants make up less than 1 percent of their total government funds revenue.

The report also cast doubt over whether Trump has the authority to withhold funding, considering federal budget laws and legal precedent. The executive order already faces legal challenges, including a lawsuit filed this week in Seattle.

What could impact credit ratings is how states react, according to the report. For example, new laws could diminish funding more drastically to sanctuary cities.

Several states and communities have responded to Trump's order by either beefing up sanctuary laws or trying to punish areas that don't comply with federal law. Cities, including Chicago and New York, have publicly defied the order. Roughly a dozen states, including Kansas, are considering measures against sanctuary cities.

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Follow Sophia Tareen on Twitter at https://twitter.com/sophiatareen.