'Fatal blow to the citizens of the State of Israel'

Local councils urge ministers to nix planned cross-ministry budget cuts: ‘Unimaginable’

In letter to Netanyahu and Smotrich, authorities warn proposal will impact their ability to provide crucial services amid Israel-Hamas war, including in education and welfare

Finance Minister Bezalel Smotrich speaks at a conference in Jerusalem, January 11, 2024. (Chaim Goldberg/Flash90)
Finance Minister Bezalel Smotrich speaks at a conference in Jerusalem, January 11, 2024. (Chaim Goldberg/Flash90)

In a strongly worded letter, the Federation of Local Authorities on Friday urged Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich to halt a proposal to cut billions of shekels in spending across ministries in the 2024 state budget that the government is set to vote on Sunday.

In the letter, the heads of 257 local government authorities from all sectors warned that the proposed spending cuts to revise the 2024 budget present a “fatal blow to the citizens of the State of Israel and the ability of local government to provide services to residents.”

The cabinet is expected on Sunday to discuss and vote on proposed amendments to the 2024 budget, which are needed to offset extra spending and other expenditures to finance the ballooning costs of the ongoing war between Israel and the Hamas terror group in the Gaza Strip that broke out in the aftermath of the October 7 atrocities.

“In the most difficult period, the country has ever known, while personal security and national resilience are cracking, and thousands of residents and teenagers from the north and the south are cut off from their homes, dropping out of school and walking around the streets idly, the government chooses to cut critical educational programs, harm the budgets of local authorities in the periphery, in the development cities, and for various communities, including Arab, Druze, Circassian and Bedouin,” the heads of local authorities wrote in the letter.

“The expected cut in the state budget for 2024 directly affects the populations which are most in need of support and investment,” the letter continued.

Federation of Local Authorities chairman Haim Bibas criticized the proposed budget cuts as “nothing less than complete disconnection, disdain for the contribution of those who stopped their lives on October 7 and since then have been fighting for our lives and security.”

File: MKs in the Knesset Finance Committee vote on the supplementary budget to cover the costs of the war with Hamas in Gaza, December 12, 2023. (Noam Moskowitz/Knesset Spokesperson’s Department)

In the letter, local authorities strongly opposed the proposed NIS 800 million ($214 million) spending cut in the education budget, which they said would lead to the closure of classrooms, increase the number of students to 40 in a class, lower achievements, hurt youth at risk and deepen social gaps.

“The education system is in a complex period in light of the harsh reality imposed on us,” they wrote in the letter. “The system deals every day with children who experience severe trauma from shelling and tens of thousands of students who were evacuated from their homes – this is the time to invest in our future generation.”

In the letter, local authorities also criticized the expected cut in the Welfare and Social Affairs Ministry as an “unimaginable and illusory decision.”

“During these days, when social workers work around the clock to meet the ever-growing needs of the population directly and indirectly affected by the October 7 attack, the Finance Ministry chooses to cut the welfare budgets that are intended to care for them and their families,” they wrote in the letter.

The Finance Ministry is said to cut NIS 78 million ($21 million) from the Welfare and Social Services Ministry budget, which will severely impact its programs, especially those geared towards survivors of Hamas’s October 7 massacre, according to a report in Haaretz daily.

Israel in December approved changes to the 2023 state budget in light of the war, but must now make changes to the 2024 budget as well amid the huge costs of the ongoing conflict.

Prime Minister Benjamin Netanyahu, right, talks to Bank of Israel Governor Amir Yaron in Jerusalem on December 18, 2023. (GPO)

According to reports in the Hebrew-language press, the Finance Ministry proposes an across-the-board spending cut of 5 percent from all government ministries in the 2024 budget, amounting to NIS 3.6 billion ($965 million). Part of the amendments is to nix NIS 2.5 billion ($670 million) from coalition funds — discretionary funds earmarked for pet projects of MKs and ministers.

Among other proposed changes to deal with the costs of the war is the increase in a tax on electric vehicles, and an increase in the price of cigarettes.

A significant cut of NIS 7.4 billion ($2 billion) to infrastructure was also proposed, which is poised to disrupt several public transport development projects, including the cancellation of the Haifa-Nazareth light rail and a delay to the Kiryat Ata Metronit bus rapid service, Channel 13 reported.

Environmental Protection Minister Idit Silman in recent days railed against the proposals, saying that the short notice is unprecedented, and that her ministry will not accept the Treasury’s disorganized way of working. Silman warned that the taxes set out in the document will harm businesses as well as weaker segments of society, and cause “severe environmental harm.”

The proposals, which were not coordinated with the ministry, will neither encourage investment nor growth nor the necessary transition to clean technologies, she added, giving a planned increase in the purchase tax on electrical vehicles as an example of a regressive worldview.

File: Minister Benny Gantz, right, shakes hands with Prime Minister Benjamin Netanyahu in the Knesset in Jerusalem, on December 25, 2023. (Yonatan Sindel/Flash90)

War cabinet minister Benny Gantz said Wednesday that his National Unity party was yet to decide how it will vote on the upcoming budget amendment vote, and added the government must minimize its spending on coalition funds — the monies handed out in political promises.

“For months, the prime minister and finance minister told us ‘there is enough money for everyone,'” Opposition Leader Yair Lapid posted on X Wednesday, slamming the budget plans.

“There has never been such an irresponsible government in Israel,” he added.

Bank of Israel Governor Amir Yaron on Wednesday called on Netanyahu to maintain fiscal discipline ahead of the cabinet vote.

Yaron has for weeks been urging the government not to spend excessively, while cutting non-war-related expenditure.

“There is no free lunch,” Yaron wrote in a letter to Netanyahu that was seen by Reuters, stressing that markets are watching fiscal policymakers.

The Bank of Israel estimates that the Gaza war will cost NIS 210 billion ($56 billion), including defense costs and compensation, but excluding loss of income for residents near the Gaza and Lebanese borders who have been displaced due to months of cross-border rocket fire.

Sue Surkes contributed to this report.

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