Government halts transport subsidies, discretionary funds to provinces

‘The national state wants to have governors on their knees’

The government announced on Thursday that it would decrease subsidies to companies providing transport services nationally — a move that impacts the price of public transport across Argentine provinces. The new measure, together with a 98% cut of discretionary funding for provinces throughout January has provoked an outcry from governors.

Both governmental decisions impact the provinces’ finances and were announced two days after President Milei expressed his annoyance with a group of governors because, he indicated, the deputies representing the provinces in the National Congress did not back his flagship omnibus bill, which fell through in Congress earlier this week due to lack of support. 

In the aftermath of the legislative failure, the government singled out governors for having “destroyed” the bill to protect their interests and impede the current administration from solving Argentina’s “structural” problems.

“If we’re all making an effort, we understand that governors should make an effort as well,” said Presidential Spokesperson Manuel Adorni in his daily conference, during which he announced the measure.

The transport cuts announced on Thursday via a communiqué include eliminating a national fund that supports public transport in the provinces (Fondo Compensador del Interior) and an unspecified decrease in subsidies for companies providing transportation services in the Buenos Aires Metropolitan Area (AMBA). According to the communiqué, this is to directly send aid to users who need it most through the SUBE transport card. It should be noted that not every province uses the SUBE system.  

Discretionary funds transferred to the provinces and the city of Buenos Aires by the government make up 5.5% of the 24 provinces’ total income, although with marked disparities among them, according to a report prepared by the consulting firm Politikon Chaco based on data from the Economy Ministry and the provincial governments.

“This is related to the Fiscal Pact that the governors and the national government signed between 2017 and 2018, where they committed to progressively eliminate differential subsidies. The objective of all this is equity throughout the country,” said Adorni.

However, Mendoza Governor Alfredo Cornejo said that the elimination of transport subsidies in the provinces “does not comply” with this fiscal agreement and, on the contrary, upholds “strong asymmetries between the AMBA and the rest of the country.”

“Fiscal order is welcome, but it must be equitable”, wrote Cornejo, who is from the Unión Civica Radical party (UCR), on his X (formerly Twitter) account.

Another UCR governor, Maximiliano Pullaro, from Santa Fe, contended that the province he governs “has always been discriminated against” and, on this occasion, will suffer the removal of 1.5 million pesos per month.

Pullaro warned that he will not “allow any national government” to apply “more export duties for agriculture and manufacturing industries, because that goes against job creation and the economic growth of many regions of Argentina, mainly in Santa Fe.”

“The national state wants to have governors on their knees,” considered the governor of La Pampa, Sergio Ziliotto, and left open the possibility of resorting to the Supreme Court of Justice to fight the measures.

“I believe that any governor would do the same because it is something that unites us,” said Ziliotto in an interview on Radio 10.

Ziliotto mentioned that the government has also stopped providing the Teacher Incentive Fund to the provinces either, although he said that he will not cut the benefit to educators.

In this regard, the Buenos Aires provincial government led by Axel Kicillof reported that teachers’ salaries were deposited on schedule despite that “the national government did not transfer the necessary funds.” However, the provincial government highlighted that the funds “are the exclusive responsibility and obligation of the national government, and in the case of a grade teacher, account for close to 10% of their salary.”

Meanwhile, the vice-governor of Río Negro, Pedro Pesatti, contended in an interview with Radio Perfil, that if the government’s attitude towards the provinces is in line with Milei’s declarations and behavior, there would be retaliation.

“If the government decides to asphyxiate the provinces so that they cannot function [when] 85% of their budgetary resources […] finance education, security, and health, what they will bankrupt are the most important public systems that the state has,” he said.

— Télam


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