THE NATIONAL GOVT SPENDS $130 BILLION IN PROVINCIAL FUNCTIONS

In Argentina’s federal organization the provinces have the main responsibilities in citizen’s service. They have in charge primary and secondary education, public health, housing and urban services, social assistance, the police and justice. The national state, on the other hand, has specific responsibilities in interprovincial issues such as foreign defense, international relations, social security, higher education and the development of interprovincial infrastructure.

When evaluating the national government’s expenditure, such programs with interprovincial roles by the central government can be seen. But there also appear some actions in which national funds are spent on services that should be provided by the provinces and municipalities. That is, in practice, the federal state shows in several areas deviations from the rules established by the Constitution.

In order to get an idea of the magnitude of these deviations, it is possible to analyze the 2018 Budgets of five national Ministries (Education, Health, Social Development, Public Works and Housing and Environment). According to these sources, it can be seen that:

• In programs of interprovincial actions, AR$ 150 billion will be spent.
• In programs with overlapping actions with the provinces and municipalities, AR$ 130 billion are projected to be spent.
• This means that practically half of the budgets of these five ministries will be spent in functions that are not their responsibility.

These data shows the significant magnitude of national resources spent in actions that are local responsibility. In comparison, what these five national ministries allocate to provincial and municipal functions represents 20% of the national fiscal deficit. It is a concrete indication of how an organization more respectful of the federal regime would substantially help ordering the national public finances.

Overlapping national programs with provincial and municipal responsibilities are not a mere and innocuous institutional deviation. They are, with a few exceptions, an important waste of resources. In political speeches they are justified under the argument that they fill deficits of local governments in important social areas such as the reparation and construction of schools, health centers, streets or sewers, the distribution of school materials and medicines, food aid and salary supplements for teachers and personnel of the provincial health systems.

However, instead of improving social services they contribute to their deterioration. First of all because the actions are sporadic, they are not focused on a complete solution of the deficits. Small arrangements are made in some provincial schools, when the total universe is 41K schools, or in provincial health centers, with a universe of 8K health centers. The salary supplements finance less than 10% of the teaching salaries. In terms of housing, the 2018 Budget itself admits that national programs could hardly solve 5% of the housing deficit. But, in addition to having a marginal effect, its most negative impact is that it induces governors and mayors to take as a priority theme a pilgrimage to Buenos Aires in search of some of these national “helps”. For national officials, it is very attractive to show interest on sensitive issues and exercise power distributing resources discretionally between provinces and municipalities. For local officials the ovelapping is ideal to dilute their responsibilities.

To step forward in a more sustainable and efficient state it is essential to eliminate overlapping functions between jurisdictions. That´s why it is extremely important that the dialogue reached with the Fiscal Consensus be extended and deepened to clarify the responsibilities in the assignment of institutional roles between government levels.