Economic recovery is no longer a guarantee of higher public revenue for Mendoza. During the first half of 2026, the combined total of federal tax-sharing transfers and local taxes fell 2.2%, even as several indicators showed expanding activity. Alfredo Cornejo's government sees a disconnect that changes its planning: the economy can grow while contributing less to provincial accounts.
The explanation lies in which sectors are advancing and which are retreating. Agriculture, oil, gas and mining are among the strongest activities, while commerce, industry and construction lose ground. That difference is not neutral for the treasury: expanding sectors carry a lower provincial tax burden or generate revenue more indirectly than activities tied to consumption and added value.
Agricultural production in Mendoza does not pay the provincial turnover tax, and exports are also exempt from the province's main levy. A stronger harvest or export industry can therefore raise output without giving revenue the same boost. By contrast, the fall in manufacturing for the domestic market and in retail weakens activities that historically produced jobs, value-added tax receipts and local taxes.
Commerce is also facing two simultaneous changes. One is structural: digital purchases shorten traditional sales chains and shift activity from retail stores toward platforms, logistics and transportation. The other is immediate: about 15% of households are in arrears, limiting available credit and postponing purchases of appliances and other durable goods.
Household debt combines with fixed expenses that consume a growing share of income. The progressive reduction of subsidies for gas, electricity, fuel and transportation leaves less money for consumption even when some macroeconomic figures improve. Mendoza's banks are monitoring expensive refinancing and purchase restrictions, signs that normalization depends on more than a rise in production.
The government's assessment is that the public sector must become accustomed to a narrower revenue base. Waiting for activity to grow again is not enough because the economy's new composition may preserve the distance between output and tax collection. The challenge is to adjust spending and financing expectations without assuming that every improvement in national indicators will automatically deliver more funds to the province.
A correction depends on two changes that have not yet taken hold: lower household arrears and stronger real wages once utility rates stabilize. The government itself warns that this process will not be short. Mendoza's budget must therefore coexist with an economy that has productive winners but is not rebuilding the revenue that supports the state at the same pace.
