Mudding the playing field. Fiscal contributions to municipalities as a political construction

Abstract

In federal presidential democracies, discretionary transfers are often mentioned as a tool used by the national executive to build and strengthen subnational support, typically governors. Funds to local mayors, however, have been much less studied. With original data, in this study we analyze the distribution of a particular discretionary transfer (ATN) to the Argentine municipalities during two periods: 1997–2000 and 2016–2019. We show that the main driver for transfers is the mayor's political alignment. Indeed, the president is more likely to reward loyal mayors, but especially when both the latter and the President oppose the provincial governor. By this token, we highlight a nested political game, in which the President considers the loyalty of both mayors and governors combined to decide when to reward (or when not to reward) municipalities. Furthermore, we find that the Executive provides aid to smaller municipalities to circumvent the possibility of funding mayors from larger cities who may pose a threat as political rivals in the future. Since this pattern is more evident in localities with aligned mayors, we can infer that the President's strategy is aimed at preventing future challengers from within their own coalition.