Coalition advances key budget bill after enough Haredi MKs walk back revolt plans
Knesset approves split of Arrangements Bill, clearing path for budget to pass before deadline, but talks on Haredi draft bill still stuck, raising likelihood of early elections
The coalition on Monday narrowly managed to advance key legislation needed to adopt the 2026 state budget, after enough ultra-Orthodox members of the ruling bloc agreed to support the bill that their parties had previously threatened to block.
In order to swiftly advance the legislation known as the Arrangements Law, the coalition decided to split it into two bills, leaving some of the more controversial reforms out of the part that needs to be approved in order to pass the 2026 state budget. If the budget isn’t passed by the end of March, elections are automatically triggered.
While coalition leaders thought they had resolved the issue after the Knesset House Committee agreed to split the Arrangements Law last week, the ultra-Orthodox Shas and United Torah Judaism parties threatened to torpedo the measure due to their frustration over the ruling bloc’s failure to pass legislation granting blanket conscription exemptions to Haredi yeshiva students.
Days of negotiations between Prime Minister Benjamin Netanyahu’s Likud party and the ultra-Orthodox parties eventually succeeded in bearing fruit, however, as the Knesset on Monday approved the House Committee decision by a vote of 60 to 56.
While three members of UTJ’s more hardline Agudat Yisrael faction joined the opposition in voting against the measure, MKs from UTJ’s Degel HaTorah faction along with those in the Shas party joined the coalition to ensure it passed.
Further delays could have complicated the timeline for approving the budget, which must pass three readings by the end of March in order to prevent the dissolution of the Knesset and the triggering of early elections three months later. Elections are currently slated to be held by late October.
The Arrangements Law, which determines how funds are dispersed, passed its first reading in the plenum late last month, alongside the budget bill.
The half of the Arrangements Law that is still being prioritized by the coalition after the split includes some of the key reforms advanced by Finance Minister Bezalel Smotrich, including one aimed at opening up of the banking sector, a proposed loosening of tariffs on dairy imports as well as an NIS 30 ($10) tax on e-cigarettes — the first attempt by an Israeli government to regulate the burgeoning market.
Other reforms are being put off for now, including ones in the fields of energy, natural gas, transportation and urban planning.
Monday’s vote enables multiple committees to deliberate the provisions of the bill, enabling its swifter passage through the Knesset.
However, efforts to prevent early elections still took a hit as separate discussions between Haredi lawmakers and the legal adviser for the Knesset committee tasked with advancing the Haredi draft bill have failed to yield results, Channel 12 reported, without citing any sources.
The stalemate has led to a growing understanding among Haredi lawmakers that the draft exemption bill will not pass, according to the network.
Given that the legislation was one of the main reasons that they agreed to join Netanyahu’s coalition, the Haredi parties are more likely to collapse the government due to frustration over unmet promises on the issue, said Channel 12.
Whether that means elections will be moved up to September or June remains unclear, the network acknowledged.