The Justice Department sued Maryland on July 9 to block a state law barring local officers from asking about immigration status or holding people for federal pickup without a warrant.
Maryland is now one of more than 20 cities, counties, and states the department has sued since January 2025, a tally that reached 27 lawsuits this month, according to Justice Department litigation records reported by Stateline on July 17. Six of those suits, against Connecticut, Maryland, New Jersey, New York, a Michigan county, and Philadelphia, were filed in the past three months alone. Not one of the sued jurisdictions has told their own taxpayers, in a document any of them would actually read, what losing costs.
I’ve spent 30 years underwriting credit risk for institutional and family-office portfolios, including municipal exposure, and I’ve testified as an expert witness in securities and fiduciary litigation. In that world, a contingent liability this size gets a number and a footnote before it gets a press release. A city that borrows money is required to tell its bondholders about material risks to the revenue that repays the debt. A city fighting the Justice Department over immigration cooperation, with federal grant dollars sitting in the crossfire, has a material risk. Elected officials who litigate the policy without disclosing the exposure are treating a fiduciary obligation as optional.
The scale of the underlying cost isn’t in dispute at the national level, even if the local breakdown is thin. The Federation for American Immigration Reform’s 2023 study, using 2022 data, put the net annual cost of illegal immigration to American taxpayers at $150.7 billion after subtracting the roughly $31 billion in taxes paid by the estimated 15.5 million people in the country illegally. That is a documented estimate from a named methodology, not a guess, though it comes from an advocacy organization and deserves the label. Sanctuary jurisdictions did not create that number by themselves. They concentrate a disproportionate share of it, because they draw a disproportionate share of the population the cost is built around.
The federal money now at risk is specific. The Department of Homeland Security’s Shelter and Services Program made $363.8 million available to states, localities, and nonprofit organizations in fiscal 2023 and nearly $640.9 million in fiscal 2024 to offset local costs for released migrants. The Department of Transportation tried to condition its own grants on immigration enforcement cooperation through an April 2025 directive. A federal court blocked it with a preliminary injunction in June 2025 and made the block permanent that November. The government appealed to the First Circuit in January 2026, then dismissed its own appeal eleven days later. The injunction now stands final and unopposed.
Rep. Beth Van Duyne’s (R-TX) Recouping Funds from Sanctuary Cities Act would go further, authorizing retroactive clawback of unobligated federal funds for up to five years from any jurisdiction found noncompliant. That bill hasn’t passed. It doesn’t need to pass to function as a risk factor. A pending bill that could claw back five years of grant money is exactly the kind of thing a bond disclosure statement exists to flag, and SEC Rule 15c2-12 requires continuing disclosure of material events precisely because investors shouldn’t have to guess.
Sort what’s documented from what isn’t. The litigation count, the DOJ complaints, the DOT injunction and its appeal, and the SSP grant totals are all matters of public record. Call that category A. The proposition that sanctuary policies are the proximate cause of a specific dollar share of the national $150.7 billion figure is a reasonable inference from the data, but not something FAIR or anyone else has isolated with precision. Call that category B. The claim that a locality’s failure to disclose sanctuary-related litigation and grant exposure in its bond offering documents constitutes a securities disclosure violation is untested. No enforcement action or private suit has yet made that argument in court. Call that category C, and treat it as the argument this piece is making rather than a settled fact.
One jurisdiction gives a clean answer. The Justice Department sued Hoboken, New Jersey, along with Jersey City, Newark, and Paterson in May 2025 over ordinances limiting local cooperation with Immigration and Customs Enforcement. A federal judge dismissed the suit that June, ruling the ordinances didn’t impede federal agents given New Jersey’s own sanctuary law. Eight months later, in February 2026, Hoboken sold $193.4 million in bond anticipation notes anyway. Its official statement’s litigation section names the categories a city is expected to disclose: tax appeals, labor matters, contract disputes, and zoning fights. A federal lawsuit over the city’s own immigration ordinance, dismissed but real enough to draw a federal ruling, appears in none of it.
DELANEY HALL IS WHAT SANCTUARY STATEHOOD LOOKS LIKE
Philadelphia is finding out what happens when that gap catches up with a city still in litigation. A Trump-appointed judge issued a preliminary injunction against Philadelphia’s anti-mask ordinance for ICE agents this month, ruling the city council had, in his words, tried to sidestep the Constitution’s clear mandate. Philadelphia’s most recent general obligation offering predates that suit and says nothing about it, for the unremarkable reason that the suit didn’t exist yet. Hoboken doesn’t have that excuse. Its suit existed, got litigated, and got resolved, all before the city asked investors for money. The risk that drew a federal complaint never made the same list as a zoning dispute.
The sanctuary debate has been fought entirely as a policy argument, immigration enforcement against local autonomy, for a decade. Nobody has made the disclosure argument, and it’s the stronger one, because it doesn’t require agreement about immigration policy at all. It requires agreeing that people who spend other people’s money, or borrow against other people’s tax base, have to tell them what they’re risking. Sanctuary cities can keep their policies. They cannot keep hiding the bill.
Jay Rogers is a financial professional with more than 30 years of experience in private equity, private credit, hedge funds, and wealth management. He has a Bachelor of Science in criminal justice from Northeastern University and has completed postgraduate studies at UCLA, the University of Pennsylvania, and Harvard. He writes about issues in finance, constitutional law, national security, human nature, and public policy.
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[ H/T Washington Examiner ]
