Trump and Sanctuary Cities
Last week President Trump issued an Executive Order (EO) that amongst other things
strips federal grant money from sanctuary cities that harbor undocumented immigrants.
This is not a move that the mayors etc. of these cities appreciate and so some, such as San Francisco and Santa Clara (county) are suing. It turns out they may have a point and the blocking of money to them could well be unconstitutional.
There are two serious constitutional problems with conditioning federal grants to sanctuary cities on compliance with Section 1373. First, longstanding Supreme Court precedent mandates that the federal government may not impose conditions on grants to states and localities unless the conditions are “unambiguously” stated in the text of the law “so that the States can knowingly decide whether or not to accept those funds.” Few if any federal grants to sanctuary cities are explicitly conditioned on compliance with Section 1373. Any such condition must be passed by Congress, and may only apply to new grants, not ones that have already been appropriated. The executive cannot simply make up new conditions on its own and impose them on state and local governments. Doing so undermines both the separation of powers and federalism.
I’m not a legal scholar but this analysis (there’s a lot more at the link) makes sense.
So, assume that this is correct, how can the President cause some financial pain to coerce these cities and counties into compliance. I have an idea and I think it would either not require legislation or be legislation that could be passed via the budgeting process thus eliminating the chance of a filibuster.
The idea is that President Trump direct the IRS to not treat the interest from bonds issued by such regions as exempt from federal tax. This will pretty much kill the ability of the city (or county) to borrow in the future and is likely to cause significant pain in the present as this will likely impact their ability to get anything from the financial markets at all. At the very least they’ll find that they have to pay extremely high rates to do so rather than the lower rates they can normally expect.
It looks to me (but I am certainly not a tax law expert) that the IRS has the ability to define bond issuers as tax exempt or not and thus, since they are a part of the executive, they are subject to obeying EOs. Hence an EO stating that “sanctuary” counties and cities were not entitled to issue tax-exempt bonds would be entirely legal. Of course someone would have to do the work to gather the list but I doubt this would be very hard and indeed many of them will self-identify by suing the federal government over the current EO.
If it turns out that I’m wrong and legislation is required then it seems to me that this is a very simple bit of legislation and, since the collection of tax is a revenue raising issue, it is clearly related to the budget and hence may not be filibustered in the Senate. Thus in order for it to pass is just needs a simple majority. I would be extremely surprised if many senators and congressmen would want to vote against it given that opinion seems to be quite strongly against sanctuary cities.
The Shadow of the Olive Tree