Cash-Strapped Towns Turn to Plan B While Fighting Challenges to Illegal Immigration Laws

The Fremont City Council meets July 27 over its illegal immigration policy. (AP Photo)

A Nebraska city's decision to suspend its illegal immigration policy under threat of lawsuit is just the latest sign that civil rights groups may be able to force local governments to back down from immigration restrictions because they don't have the cash to defend them in court.

Cities across the country have faced court challenges over the past several years from groups like the American Civil Liberties Union and the Mexican American Legal Defense & Education Fund. Some have rescinded their policies; others have pressed forward in court.

But for how long? Fremont, Neb., facing suit from both those groups, on Tuesday suspended its ban on hiring or renting property to illegal immigrants -- a policy approved by ballot measure just five weeks ago. City officials were concerned about the cost of implementing the law, including legal fees, overtime and other expenses.

"They try to deter cities," said Lou Barletta, mayor of Hazleton, Pa. "It's a legitimate worry."

Hazleton is years into a court battle against the ACLU and other groups over its policy that, like Fremont's, restricts landlords from renting to illegal immigrants and businesses from hiring them. A district court judge ruled it unconstitutional, but the case was appealed to the 3rd Circuit Court of Appeals.

Barletta said the case has cost a half-million dollars to litigate, but that taxpayer money is not financing the legal battle. Barletta said he started a legal defense fund to raise private money and urged other jurisdictions to do the same. He suggested that in the long run, cities will save money by minimizing the services they provide for illegal immigrants who aren't paying taxes.

"It's a no-win situation. To do nothing, there's a cost and to fight it, there's a cost," he said, adding that the appeals court's decision could have bearing on other jurisdictions trying to impose similar ordinances.

Fremont is hardly in the clear, though. The decision to delay the policy didn't end the court battle and both sides are due in court Wednesday as opponents push for a federal judge to permanently quash the ordinance.

The ACLU says the law invites racial profiling against anybody who so much as looks "foreign." The group claims the law would rely on a flawed verification system for employers trying to check applicants' immigration status -- the ACLU says that, in turn, legal workers will be turned away.

Jennifer Chang Newell, a staff attorney with the ACLU and counsel for the Fremont case, said the city's suspension will not affect the length of the lawsuit. But she said if other local governments step back from enacting similar ordinances after watching what plays out in Fremont, all the better.

"The ACLU certainly hopes that the fact that these laws are unconstitutional and that we have been challenging them ... is a deterrent to other cities and localities that are thinking about this," she told FoxNews.com.

Amy Miller, legal director for the ACLU of Nebraska, said in a written statement that Fremont made the "responsible" choice with its vote to "spare residents of Fremont from worrying about losing housing and jobs because of their appearance and accent pending a final resolution by the court."

Arizona, which revived a nationwide debate over immigration when it passed its strict policy in April, has been battling the ACLU as well as the Obama administration over its law. But other local governments don't have that kind of spending power.

In the southern New Jersey town of Riverside, the Township Committee rescinded its immigration ordinance in 2007 after the legal bills from court challenges became too much to handle. The city also reportedly suffered an economic crunch as immigrants fled in the wake of the law's passage.

Riverside got out before the legal costs became too steep, but in one Texas city outside Dallas, the court fight has cost millions.

Farmers Branch has been defending itself in court since 2006. According to the city's finance director, legal costs have nearly hit $3.5 million, and they continue to climb. The city, like Hazleton, has a legal defense fund that collects donations but that account has only brought in $43,000 to date. The rest is taxpayer money. The city's ordinance also clamps down on renting property to illegal immigrants -- a U.S. District Court judge in March ruled against the ordinance, but the city has appealed.

Farmers Branch Finance Director Charles Cox would not speculate on how long the city can continue to fund the lawsuit.

"Spending a lot of money on legal bills in conjunction with (the recession) -- it's a difficult time," Cox said. "It's not an insignificant amount of money."