Towards budget and reform

President Javier Millay led a summit with governors a few days ago/Presidency

The central government, through Chief of Staff Manuel Adorni and appointed Interior Minister Diego Santilli (who is finally scheduled to be sworn in tomorrow), will resume dialogue with the governors from today. The aim is to seek an agreement that would allow the so-called “second generation reforms” promoted by President Javier Millei to be undertaken, and to move forward with an agreement towards the approval of the 2026 budget.

The government’s strategy focuses on a preliminary round of bilateral dialogue with representatives from each state before holding an expanded summit. It is within this framework that today Martín Jarrola from Córdoba and Marcelo Orrego from San Juan visit Casa Rosada.

Also on the agenda is a possible meeting with Gustavo Sains of Salta, Maximiliano Puraro (Santa Fe), Osvaldo Jardo (Tucuman), Hugo Passalacqua (Misiones), Alfredo Cornejo (Mendoza) and Gustavo Valdes (Corrientes). Meanwhile, Adorni and Santilli have already signed Ignacio Torres (Chubut) and Raul Jalil (Catamarca).

The executive branch intends to “fuel relations with localities” in order to secure the necessary votes in Congress to approve key issues such as the 2026 budget and labor, tax and penal reform during a special session scheduled for Dec. 10-31.

For La Libertad Avanza (LLA), the need to get this package approved by Congress is crucial and requires the support of the Alliance and regional blocs. This is the motivation for interaction with local areas. Even in La Rosada, they recognize that structural changes cannot occur “without the will of the majority of the governors.”

The priority for local leaders is to ensure that any reforms do not imply a net loss of shareable resources. They warn that while distortionary tax cuts at the national level may be welcomed by the productive sector, the resulting reduction in the amount distributed will have a direct impact on local finances.

weight of united states

Dialogue between the state executive branch and the governor will also take place as state leaders seek to strengthen their political influence in Congress through a federal “united states” coalition.

Despite the poor electoral results of the October 26 parliamentary elections, this coalition, which combines radical leaders and dissident Peronists such as Pralo, Djallola, and Torres among others, seeks to establish itself as a powerful bloc within parliament that will act as an arbiter of governing capacity or a third major force, negotiating support with both the LLA and Peronism.

Although they deny being “hard-core opponents”, support for Millais’ reforms will be conditional on the government responding to their claims about joint participation and funding for states.

At the same time, the emergence of “unitary states” has created further tensions within the Radical Party, which is one of the most prominent parties within this federal grouping.

This is because, while the majority of radical governors are committed to dialogue and practical cooperation with the government to obtain resources and agreements for the state, other sectors of the UCR, such as the Siempre Democracy, maintain a tougher stance against the ruling party.

One of the unknowns to be resolved at this point is whether the representatives elected by the united states will align with blocs such as the UCR or form their own benches under the influence of the federal government. In short, the dilemma is whether to work with Mr Millais and risk damaging the party’s identity, or resist and lose influence in important negotiations such as the budget and future reforms.