Mexico state governors want more infrastructure funds for 2020

Members of the Mexican national conference of state governors (Conago) have been very active over the past few months trying to secure federal funds for the development of infrastructure projects in their states.

They want the funds be included in the federal budget for next year. A proposal drafted by the finance ministry (SHCP) is expected to be submitted to congress for approval on September 8. 

Amid a context of austerity cuts and slower investment, the governors decided to take up on an offer from President Andrés Manuel López Obrador (AMLO), who pledged earlier this year to finance at least one high-impact infrastructure project in each of the 32 states for 2020.

As suggested by AMLO, each governor selected a project they considered socially important, which was included in a list drafted by Conago. The conference’s president, Querétaro governor Francisco Domínguez, personally handed in the list to AMLO in early July.

At the time, Domínguez said AMLO's team would review the projects and establish a spending cap for each one. The final list of projects to be included in the budget has not been publicly disclosed.

At a meeting on Wednesday between governors from the conservative PAN opposition party and finance minister Arturo Herrera, the local leaders presented an agenda that, in addition to reaffirming the need for funding at least one strategic project in each of the states, also included the creation of an infrastructure fund. 

Baja California Sur governor Carlos Mendoza told local paper La Jornada that the fund's objective would be to facilitate a better distribution of public investment between the different regions of the country and to compensate for the cancellation of the Ramo 33 from the budget – funds that were allocated to bolster state finances and were used at the discretion of governors to carry out different actions, including infrastructure investment.

Some of the governors told reporters that Herrera had committed to honor AMLO’s promise, while urging them to improve tax collection in their states.

Potential projects

The 32 projects on Conago’s list require investments ranging from 2bn to 25bn pesos (US$491mn). 

The costliest project entails the construction of a 25bn-peso interurban rail link between Celaya and León, two cities located in Guanajuato state.

Another proposal involves reviving the project to build a passenger train between Mexico City and Querétaro for which a contract was tendered and then cancelled by the former federal administration amid allegations of corruption.

The idea of building a BRT system for the La Laguna region in the states of Durango and Coahuila was also included in the list, despite the fact that AMLO had announced he would cancel federal funding for the project based on the results of a show-of-hands vote he held during a June visit to Durango.

At the time of the announcement and on subsequent occasions, AMLO publicly said that most governors in the northern states –including Durango and Coahuila- had expressed their intention to prioritize water projects over other type of works. 

The president has actually pledged to support the construction of a 70km pipeline to draw water from the Francisco Zarco dam in Durango’s Lerdo municipality to supply Gómez Palacio, in the same state, and Torreón city, in Coahuila – all of them located in La Laguna region.

It is not clear whether the federal government will actually end up earmarking funds for the projects proposed by the governors, or if the proposals AMLO considers more feasible and with more popular support will be financed instead.

AMLO showed his line of thought when it comes to the selection of projects at a press conference in August.

At the conference, the leftist leader said the Durango governor had proposed the development of three different projects. One of them entailed the expansion of Mazatlán port in neighboring Sinaloa state and the construction of a freight rail line to link the port with Durango. Although he committed to evaluate the project based on available funds, AMLO said that promising to expand the port would be a demagogic act as promises should not be made on things that cannot be delivered. The president said he could commit to building the pipeline - another one of the governor’s three proposals - as it was the most urgent due to public health considerations.

The federal government is focusing most of its infrastructure efforts in the development of a handful of landmark projects, the rehabilitation of existing infrastructure, and the completion of works left unfinished by previous governments. Considering this, and in addition to the significant spending allocated to social programs, it is yet unknown if there will be enough funds to develop more investment-heavy projects in other parts of the country.

Meanwhile, the governors have proposed to develop their chosen projects on a multi-year financing basis or via public-private partnership models.

PICTURED: A group of state governors affiliated with the PAN party meet finance minister Arturo Herrera (fourth from left) in Mexico City on Wednesday, September 4. CREDIT: Francisco Domínguez's Twitter account.