US cities and states challenge federal public-charge rule that could shift costs to local budgets

A coalition of US cities and states has filed lawsuits against the Department of Homeland Security (DHS) over a proposed rule that would deny green cards to immigrants who use public benefits. The litigation, reported by Smart Cities Dive on 15 September 2026, argues the change would shift costs onto local governments and discourage eligible residents from accessing housing, health and nutrition programmes.

The proposed rule expands the “public charge” test used in immigration proceedings. Under current law, immigration officials may consider whether an applicant is likely to become primarily dependent on the government for subsistence. The new rule would broaden the definition to include use of non-cash benefits such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP) and housing vouchers.

Key facts

What the proposed rule changes

The DHS proposal would make it harder for immigrants applying for lawful permanent residence (green cards) to qualify if they or a family member have used certain public benefits. Previously, the public charge test focused on cash assistance or long-term institutional care. The expanded definition would include benefits that support basic needs: health insurance through Medicaid, food assistance through SNAP, and rental or housing subsidies.

The rule would also give immigration officials broader discretion to weigh an applicant’s past or current benefit use against their application. Critics argue this creates a chilling effect, where eligible immigrants avoid enrolling in assistance programmes for fear of jeopardising their immigration status.

Local government cost concerns

The lawsuits allege that the rule would shift financial burdens from the federal government to states and cities. If immigrants avoid federal benefits, local governments may face increased demand for emergency health care, homelessness services and food banks, all of which are often funded through municipal or county budgets.

City attorneys general and mayors argue that the rule undermines public health and housing stability. When residents forgo preventive health care or nutrition assistance, the costs of treating avoidable conditions fall on local emergency rooms and safety-net providers. Similarly, reduced access to housing vouchers could increase homelessness, pushing more people into shelters or street homelessness that cities must manage.

Discouraging eligible residents

A central argument in the lawsuits is that the rule discourages eligible residents from accessing benefits, even when they are lawfully entitled to them. Research cited by the plaintiffs suggests that previous changes to the public charge rule under the Trump administration led to significant disenrollment from Medicaid and SNAP among immigrant families, including those with US-citizen children.

The current proposal, the lawsuits contend, would repeat that pattern. Families may disenroll from benefits out of fear, even if no member is subject to immigration proceedings. This could reduce children’s access to health care and nutrition, with long-term consequences for public health and educational outcomes.

Planning and housing implications

For urban planners and housing officials, the rule has direct practical consequences. Housing voucher programmes, such as the federal Housing Choice Voucher scheme, rely on take-up by eligible households. If immigrant families avoid applying for or renewing vouchers, vacancy rates in the programme could rise, reducing the leverage that local housing authorities have to negotiate with landlords.

At the same time, local homelessness prevention programmes may face increased demand. Cities that have invested in rapid rehousing or rental assistance could see those resources stretched if federal housing support is underused.

The rule also intersects with zoning and land-use planning. If more families double up or move into overcrowded housing to avoid benefit scrutiny, local code enforcement and health departments may face pressure. Planners working on equitable development strategies may find that federal policy shifts undermine efforts to stabilise neighbourhoods through housing assistance.

What happens next

The lawsuits will proceed in federal court. The DHS has not yet published a final rule, and the litigation may delay or block implementation. Observers expect the legal challenge to focus on whether the agency exceeded its statutory authority and whether the rule violates constitutional protections for due process.

For local government officials and planners in the US, the immediate step is to monitor the court proceedings and assess how the rule would affect local benefit programmes. Some cities have already begun public education campaigns to reassure eligible residents that using benefits does not automatically affect immigration status, though the proposed rule could complicate those messages.

This story is based on initial reporting by Smart Cities Dive. The full legal complaints and DHS rule text are not yet available in the public record, so the precise claims and legal arguments may evolve as the cases develop.

Source: Smart Cities Dive, “Cities, states sue DHS over plan to deny green cards to immigrants who use public benefits”, 15 September 2026. https://www.smartcitiesdive.com/news/cities-states-sue-dhs-public-charge-rule-deny-green-cards-immigrants-benefits/830412/