headed by an immigrant. More than half of all immigrant-headed households in California were headed by an immigrant from Latin America and approximately one-fourth were headed by an Asian immigrant.

With the rise in the number of foreign-born residents, immigration issues have taken center stage on the California political scene. In 1994, Californians voted in favor of Proposition 187, which, had it not been blocked by the courts, would have eliminated public education and health services for undocumented aliens (Ayres, 1995). Decrying the costs of incarcerating and providing public education and other services to undocumented aliens. Governor Pete Wilson sued the federal government in 1994 for funds to cover the state's expenditures, claiming that California was adversely affected by failed federal policy ( New York Times, 1994; Freedberg, 1997). In 1998, Californians will return to the polls to determine whether the state will continue to provide bilingual education in the public schools (Pyle, 1997).

The debate over the provision of services to immigrants and costs incurred has been fueled by extensive research into the fiscal impacts of immigration on government revenues and expenditures. Generally, these studies have found that both natives and immigrants make the largest tax contributions to the federal government, that immigrants make lower average tax contributions, and that immigrants are a greater burden on state and local governments (Vernez and McCarthy, 1996; Garvey and Espenshade, 1996). Three studies have examined fiscal impacts of immigrants in California. Los Angeles County (1992) found that recent legal immigrants, legalized aliens, and undocumented aliens and their children incurred costs to the county in excess of their share of the population. Although these immigrants and their families composed 25 percent of the county population, this group consumed 30.9 percent of total county services while paying only 8.7 percent of tax revenues, most of which flowed to the federal government. Two later studies (Romero et al., 1994; Urban Institute, 1994) found that the benefits and services consumed by undocumented aliens greatly exceeded their tax contributions. Rothman and Espenshade (1992) review immigrant fiscal impact studies completed through 1992; Vernez and McCarthy (1996) and MaCurdy et al. (in this volume) review more recent studies.

Several problems with these studies make the results difficult to compare and to fully assess the fiscal impacts of immigration. Among these problems, the earlier studies are limited in scope either because of their focus on undocumented aliens or a small geographic area. The studies do not provide estimates of the contributions of natives, preventing examination of the relative impacts of immigrants. Comparisons of subgroups of immigrants by age or region of origin are also not available. Finally, because the studies examine a limited number of benefits and taxes and fail to match estimates provided with administrative budget information, a full accounting of the relationship between immigrants and government budgets is not provided.

In this chapter I examine the fiscal impacts of native and foreign-born house-