BUENOS AIRES, May 25, 2025 (AP) — Seven provincial governors announced a joint constitutional challenge Wednesday after the federal Treasury withheld 2.1 trillion pesos ($2.3 billion) in constitutionally mandated revenue-sharing payments for May — the largest single freeze in Argentina's federal transfer history and an escalation of the confrontation between President Javier Milei and the country's powerful provincial bosses.
The governors, representing Buenos Aires, Chaco, Formosa, Catamarca, Santiago del Estero, La Rioja, and Tierra del Fuego, accused Milei's administration of "federal blackmail" and said the withholding would force them to delay salary payments to 340,000 teachers, 180,000 healthcare workers, and 95,000 police officers across their provinces.
"The provinces are not subsidiaries of the Casa Rosada," said Buenos Aires Governor Axel Kicillof, the most prominent figure in the revolt, at a press conference in La Plata. "This is a direct attack on federalism and the constitution. We will not allow our people to pay for Milei's fiscal circus."
The Treasury confirmed the withholding in a brief statement issued at 6 p.m., saying the decision was "temporary and necessary" to meet IMF primary surplus targets for the second quarter. The ministry said transfers would resume in June but at a reduced rate that reflects lower-than-projected tax collections, blaming a 12% decline in VAT revenue on reduced consumer spending.
The conflict centers on Argentina's coparticipación system, which distributes approximately 45% of federal tax revenue to the provinces according to a formula set by a 1988 law that heavily weights population and economic activity. Milei's government has argued the formula is outdated and favors politically connected provinces over productive ones, but any change requires congressional supermajorities it does not command.
Provincial officials from Chaco, which relies on federal transfers for 82% of its $2.1 billion annual budget, warned that schools would close without the funds and that 14,000 teachers faced delayed paychecks.
The Supreme Court has previously ruled that coparticipación transfers are constitutionally protected and cannot be unilaterally altered by the executive. In 2022, the court ordered the Fernández administration to repay withheld transfers with interest — a precedent the governors cited in their challenge, which was filed jointly Wednesday evening.
Political analysts said the confrontation tests the limits of Milei's confrontational style. Provincial governors control the Senate, and if Milei pushes them too far, they can block everything — judges, ambassadors, treaties, international agreements. Buenos Aires Governor Kicillof alone represents 38% of the national electorate.
Milei responded defiantly at a rally in Córdoba on Thursday night before 12,000 supporters. "The governors have been living off your taxes for decades. Now the party is over, and they're crying. Let them sue. Let them cry. Argentina comes first, not their political machines."
