Mayors call sweeping strike Monday to protest being forced to share municipal taxes

Local governments across Israel are expected to go on strike starting Monday in protest against the coalition’s plan to transfer municipal tax income from wealthier cities to poorer ones, especially those far from Israel’s center.

The Federation of Local Authorities in Israel, which represents about 200 Israeli municipalities, announced on Sunday that starting the next day, there would be a general freeze on providing municipal services unless the coalition backed off from its so-called Arnona Fund plan. Arnona is property tax, set and managed by each municipality.

“This is an attempt to impair education, welfare, culture and our ability to provide municipal services to our residents, and it will bring about the collapse of the local authorities,” said the federation in a statement announcing the walkout. “It is not our job to worry about budgetary resources to solve national crises”

The strike is expected to affect basic services, such as administrative needs and garbage pickup.

The organization did not set a time limit for the strike, nor specify which of its partner municipalities would comply — and a few, including Jerusalem, Ashkelon and Gaza border communities, have already bowed out. The decision was made after the Knesset’s Finance Committee voted on Sunday to include the Arnona Fund as part of the Arrangements Bill accompanying the 2023-2024 state budget, which is expected to be finalized within the next two weeks.

Backers say the measure will help less wealthy municipalities incentivize housing, and have put an emphasis on the fund helping to build communities far from Israel’s center. Detractors say that it punishes communities that have already invested in attracting employers, and takes money that would otherwise be directed toward improving citizen services, such as education and culture.

Directing comments toward the federation, Finance Minister Bezalel Smotrich said in a Sunday statement that the mayors “know the truth, that this bill creates justice between the municipalities in the center, which are in an attractive location and benefit from infrastructure and in any case constitute the business center of Israel, and the far-off municipalities in the periphery.”

United Torah Judaism MK Moshe Gafni chairs a Finance Committee meeting at the Knesset on May 14, 2023. (Oren Ben Hakoon/Flash90)

The local government federation has been continuously fighting against the proposal in the Finance Committee and with the Finance Ministry for the past two months, and shortly before voting on the matter on Sunday, its head, Modiin Mayor Haim Bibas, told the Finance Committee that the bill was “unacceptable.”

“We oppose it, we opposed it from the beginning, and we oppose it now as well. I wish it would disappear from the world,” Bibas told the Knesset panel.

Bibas is a strong figure within Prime Minister Benjamin Netanyahu’s Likud party’s internal politics, and is often discussed by party insiders as a future national political force. Addressing Likud and other coalition lawmakers present in the meeting, Bibas entreated them to be loyal “to the public who sent you” to the parliament.

“Your job is to stop and say that such a destructive law doesn’t belong in the Arrangements Bill,” he said. “Our stance is absolutely clear: We oppose this law, and this is your opportunity, coalition residents [of towns adversely affected by the plan], because in the end you live in these cities.”

Ramat Gan Mayor Carmel Shama-Hacohen speaks at a Knesset Finance Committee meeting on May 14, 2023. (Oren Ben Hakoon/Flash90)

Ramat Gan Mayor Carmel Shama-Hacohen, whose city abuts Tel Aviv, said that the Arnona Fund was a form of terrorism.

“We are under jihad. Not an Islamic jihad — but a jihad of decrees, and we don’t have an Iron Dome” to defend against it, he said, in reference to Israel’s lifesaving rocket interception technology that recently worked overtime in the country’s flareup with Palestinian Islamic Jihad.

Uncollected piles of garbage, in Jerusalem’s Mea Shearim neighborhood, March 25, 2021. (Yonatan Sindel/Flash90)

Several Hebrew media outlets reported a uniformly worded quote from an unnamed senior coalition source, who waved off the municipal strike as a “bluff” posed by “rich local authorities in the center of the country.”

Yisrael Gal, mayor of the central Israeli city of Kiryat Ono, griped to the committee that the Arnona Fund would strip his town of the opportunity to reap the benefits of sustained effort to develop the local economy.

Kiryat Ono approved the creation of an industrial zone in 2017, which Gal said “crowded the city, created traffic jams, and made people suffer.”

The city is “finally reaching profit and independence,” said Gal, accusing the committee of penalizing his city for making an investment to better its situation. “That pound of flesh that I will have, you want to take from me?” he asked.

Committee chair MK Moshe Gafni, from the ultra-Orthodox United Torah Judaism party, brushed off the criticism, saying that the bill is “basically correct” and the result of “agreement.”

“I was not involved in the details, but I was told that they would come to an agreement, because I wanted it to come to an agreement, even though the local authorities do not want the law,” Gafni said. The mayors present denied that they had given their consent to the bill.

Smotrich accused Bibas and the federation of “backtracking,” claiming they reached agreements this past Thursday evening.

“It’s a shame that you don’t have the courage to show leadership and admit that on Thursday night we reached agreements with you on the bill and its formulation,” Smotrich wrote in his Sunday afternoon statement.

The Federation of Local Authorities in Israel told The Times of Israel that there were agreements to soften the wording and alter the formula to be applied against the municipalities, should the bill pass. However, the federation said that it never reached an agreement to support passing the law and has consistently opposed the measure.

Following the Finance Committee’s decision to go ahead with the Arnona Fund, despite vocal protest by several mayors in the Finance Committee’s heated debate, the federation held an “emergency meeting” to declare the municipal services strike.

The fight even spilled over into Likud party internal politics, with Hebrew business sheet The Marker reporting that Netanyahu wants “to oust Haim Bibas” from spheres of influence in Likud.

Bibas previously butted heads with his party in March by publicly pressing for a pause to the coalition’s march toward unilaterally remaking the judiciary, speaking up at a critical moment to advocate negotiation.

Tel Aviv, Haifa, and Rishon Lezion are among the cities striking on Monday, with Tel Aviv Mayor Ron Huldai saying “we have no choice,” according to Hebrew media. Tel Aviv stands to have NIS 192 million ($52 million) transferred out of its coffers in 2024-2028, according to data shared by the Finance Committee on Sunday. Haifa would lose NIS 116 million ($32 million) and Rishon Lezion would net a modest NIS 8 million ($2 million).