One issue that has resurfaced during the recent economic downturn and budget crisis in California is illegal immigration.  California lawmakers are struggling with a budget gap of $26.3 billion and many taxpayers have started questioning the cost to the state of illegal immigrants.

As per the last reliable figures collected in 2006, there were 2.8 million illegal immigrants living in California, according to the non-partisan Public Policy Institute of California. That represented about 8% of the population of the state and as much as a quarter of the nation's illegal immigrants. About 60% of California's illegal immigrants were from Mexico and over 90% from Latin America.

The question of whether taxpayers should provide services to illegal residents became a major political issue even back during California's dot com recession earlier in the decade. Now once more, activists opposed to illegal immigration have launched a campaign which among other things, proposes to even cut off welfare payments to the children of illegal immigrants born in the US.

The Center for Continuing Study of the California Economy, based in Palo Alto, has analyzed the costs of illegal immigration and most studies show that in the short term, illegal immigrants, who tend to be poorer and have more children than average, use more in public services than they contribute in taxes. However the long terms effects were more positive where educated illegal immigrant children find better jobs and earn higher salaries which in turn benefits Californians with increased tax payments and more sophisticated work skills.

Gov. Arnold Schwarzenegger while saying that it is wrong to blame illegal immigrants for the state's fiscal problems has however proposed to limit welfare and non emergency healthcare for illegal immigrants and their families. He has not received much support on this from the Legislature or from the Obama administration in Washington.

Recently, Democrats moved one step closer to giving free health insurance to the nation’s estimated 12 million illegal aliens when they defeated a Republican-backed amendment that would have prevented illegal aliens from receiving government subsidized health care under the proposed plan backed by House Democrats and President Obama. Anti-immigration activists, sounding a note of caution, say that the availability of low-cost benefits, including health insurance and in-state tuition, will only lure more immigrants to come to the United States. A recent Rasmussen Reports poll found that an overwhelming 80 percent of Americans oppose covering illegal immigrants in any public health care bill.

Those looking to restrict illegal immigration in a down economy, in California, have found an encouraging trend from the statistics released by the National Center for Health Statistics which showed California had one of the larger declines in birth. There were 551,592 live births in 2008 in the state, compared with 566,388 in 2007, according to the report. Some experts believe that the decline in births is tied to the recession. But others point out that fewer immigrants are coming to the country because of the hard economic times. A very high proportion of illegal immigrants, have lost their jobs during this recession and without access to employment benefits, more and more illegal immigrants are going back, south of the border.

How this sensitive issue develops in the future, remains to be seen, but illegal immigration will continue to remain a subject of intense state and national debate.