Looking to project political stability, Prime Minister Benjamin Netanyahu on Tuesday thanked coalition partners for coming together to pass the 2023-2024 state budget, hours before the first part of the package sailed through its final two votes in the Knesset.
Lawmakers passed the 2023 budget 64-55 along coalition lines just before 2 a.m. Wednesday, with a 2024 budget and accompanying bill laying out how the earmarks are to be used also set to be passed before the final gavel.
The budget approvals will give the Netanyahu government 18 months of runway before having to pass another budget or face snap elections, clearing the coalition’s main political hurdle since the Knesset returned from recess on April 30.
“I think our ability to do this comes from our collaboration between friends,” Netanyahu stressed in remarks delivered at the parliament building, calling out his fellow coalition leaders by name after days of wrangling over the budget.
“This government will last all four of its years,” he added, in a comment directed to opposition politicians.
Members of Knesset began voting late Tuesday on the elements of the budget, though an opposition filibuster had dragged the process out for hours by Wednesday morning.
The votes cap months of bickering within the hardline government that have highlighted fault lines within Netanyahu’s coalition, with parts of three parties publicly pulling their support for the budget unless handed additional funding allocations. Two of the three issues were resolved Monday, locking up the majority needed to pass the budget in its final two floor votes, days ahead of its May 29 deadline.
Flanked by coalition leaders, Netanyahu said the two-year, trillion shekel ($270 billion) plan will positively “surprise” the public, amid criticism that it channels funds to sectoral interests but does not do enough to fight Israel’s rising cost of living.
“We are fighting on all fronts. We are active in the fight against cost of living,” the premier said, in remarks made alongside his coalition partners.
Finance Minister Bezalel Smotrich reiterated that message, saying the budget will “provide stability and certainty to the economy,” while not commenting on credit agencies’ warnings and the drop in tax revenue amid the government’s push to overhaul the judiciary. Smotrich similarly promised to fight cost of living.
The comments elicited a fiery response from opposition leader Yair Lapid, who echoed criticism that the budget was geared toward political interests but does not include measures to address rising prices.
“This government is terrible for the economy. It said it would reduce cost of living, there’s nothing connected to cost of living in this budget. There is no reform to reduce cost of living,” Lapid said.
Lapid also slammed the state budget as “reckless” and setting up the next generation to be “poorer than their parents.”
“This budget is reckless, it’s a disaster for the Israeli economy and for Israeli society, and it violates the social contract with the State of Israel that we, our children, and our children’s children will pay for,” he charged.
The opposition leader has routinely attacked the government’s allocation of NIS 13.7 billion ($3.7 billion) in discretionary funding, largely to sectoral interests. Among them are generous budgets for funding religious scholars and schools, whose studies often do not enable them to succeed in the workforce.
“Think about what could have been possible with that money, instead of condemning a full generation to poverty. What they’re doing now says not just Haredi children will be condemned to poverty, also our children, this will be the first generation in Israeli history where children will be poorer than their parents,” Lapid said.
“They won’t be able to support themselves, someone will have to support them,” added the Yesh Atid party leader, who has long been critical of the lower rates of ultra-Orthodox participation in the workforce and military.
As the Knesset began voting on the budget, thousands of protesters gathered in Jerusalem, waving Israeli flags and chanting against the government “looting” the state coffers. Demonstrators similarly criticized the budget for funneling billions in grants to the ultra-Orthodox community, while allowing men in that community to avoid employment and military service.
The budget allocates at least NIS 5.9 billion ($1.6 billion) in discretionary funding to satisfy political promises to ultra-Orthodox parties, including grants to yeshiva students, unregulated religious schools that do not teach core subjects like math and science, and funding a food stamp program that is not tied to working and criticized as tailored to disproportionately benefit the ultra-Orthodox community.
Netanyahu and Smotrich agreed on Monday to fund expanded stipends to yeshiva students to the tune of up to NIS 250 million ($68 million), using any surplus funds left over from ultra-Orthodox schools. This deal, which quelled rebellion among a subsection of ultra-Orthodox politicians, also included authorization to retroactively pay yeshiva students a grant, as if the funding applied from the beginning of 2023.
On Tuesday, the treasury’s legal adviser threw a wrench into the latter plan, saying that because the funds are expected to come from surpluses, they cannot be allocated before October.
Finance Ministry legal adviser Asi Messing wrote in an opinion that the government did not seek the necessary legal opinions, and that any future distribution “would be subject to receiving these opinions, as a condition for actually allocating the funds.”
Messing was the subject of a brief display of inter-coalition tension during the Knesset session, when Likud MK David Amsallem called him a “professional saboteur” from the plenum rostrum. Smotrich objected to insulting a civil servant who cannot respond and lightly tussled with Amsallem for the microphone for several seconds.
אמסלם תקף יועמש האוצר אסי מסינג ״החבלן המקצועי״.
שר האוצר חטף לו את המיקרופון וביקש ממנו להפסיק.
כל כבוד לסמוטריץ׳ pic.twitter.com/p8FJruSBHc
— מיכאל שמש Michael Shemesh (@shemeshmicha) May 23, 2023
Netanyahu secured the last of the votes needed to pass the state budget by making a similar promise to what he gave Smotrich to far-right party Otzma Yehudit on Monday evening. Otzma Yehudit also staged a protest, unless it received identical funding for its key priorities, specifically more money for a party-held ministry that supports development in the Negev and the Galilee regions.
Netanyahu and Smotrich solved both problems without opening the budget’s NIS 998 billion ($270 billion) boundary, which would have risked extending the process by requiring a return to Knesset committees to approve the changes.
While glossing over internal pressure, Smotrich said that the budget survived “enormous pressure from interested parties, irresponsible strikes and media campaigns,” but the government “did not capitulate.”
Specifically, he called out the government’s controversial plan to transfer a portion of municipal taxes from more economically active cities to less commercial ones. This so-called Arnona Fund kicked off multi-day strikes across negatively affected municipalities, including Tel Aviv and Haifa.
“We proved in the budget that we do not capitulate and do not surrender,” the finance minister said, sitting alongside Netanyahu.