Municipal strike in protest of tax redistribution to continue, but schools to reopen

Federation of Local Authorities vows it will not participate in Arnona Fund plan to redistribute municipal taxes, as Knesset Finance Committee votes to approve measure

View of an empty classroom at a school in Tel Aviv, during a general strike of some municipalities and local authorities, on May 15, 2023. (Flash90)
View of an empty classroom at a school in Tel Aviv, during a general strike of some municipalities and local authorities, on May 15, 2023. (Flash90)

A major strike by municipalities across the country is set to continue for another three days, but the education system will resume its normal operations throughout the country, after being shuttered in many locations, the Federation of Local Authorities in Israel said Monday.

Reopening the schools was decided, “in order not to harm parents and children — we will not allow them to be held hostage by the finance minister,” the federation said in a statement.

The strike, which will continue until Thursday, will include not issuing construction permits, not convening planning committees, and freezing construction agreements with the state in high-demand areas. A freeze on garbage collection and welfare services will also remain in place.

Authorities say they will continue protest action until the coalition backs off from its so-called Arnona Fund plan. Arnona is a property tax, set and managed by each municipality.

The proposal is to redistribute a portion of municipal taxes collected from commercial entities. The measure would pull funds from central and wealthier localities to the benefit of more remote and modest municipalities, billed as a way to incentivize housing in the latter.

The measure was approved as an addition to the Arrangements Bill in a Knesset Finance Committee vote late Monday. It will now head to the Knesset floor for its final votes alongside the state budget.

Head of the Knesset Finance committee MK Moshe Gafni leads a meeting on the Arnona Fund at the Knesset, in Jerusalem, on May 15, 2023. (Yonatan Sindel/Flash90)

“The local authorities have no intention of cooperating with the fund to steal public funds, and we will turn to legal system,” the Federation said. “There will be no transfer of funds to the fund.”

The Federation, representing about 200 Israeli municipalities, announced the open-ended strike the day on Sunday.

On Monday, participating municipalities closed schools from kindergarten up, garbage collection and welfare services were halted, municipal inspectors stopped handing out fines, and city offices were closed to the public, as were libraries, and cultural and sports centers.

Special education and matriculation exams were exempt from the strike.

Backers say the measure will help less wealthy municipalities incentivize residential real estate instead of business — though businesses pay more tax and are therefore currently more attractive to municipal authorities — 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 services, such as education and culture.

Federation of Local Authorities chair and mayor of Modiin Haim Bibas speaks at a Knesset Finance Committee meeting on May 14, 2023. (Oren Ben Hakoon/Flash90)

They also accuse the coalition of planning to use the funds to pay for sectoral demands made by coalition partners, like subsidies to the ultra-Orthodox. They also note that settlements in the West Bank are exempt from contributing to the fund, and that it is structured in a way that makes Arab municipalities less likely to benefit.

The heads of several Arab towns and regional authorities announced that they were also joining the strike.

“The distribution of this fund is not just and there is nothing good here for the Arab citizens. In fact, it’s the opposite,” the Arab mayors said.

Among the cities already striking were Tel Aviv, Holon, Ramat Gan, Givatayim, Kfar Saba, Ra’anana, Rishon Lezion, Herzliya, Hod Hasharon, Modiin, Ramle, Ness Ziona, Ashdod, Hadera, Haifa, Nesher, Beit She’an, Kiryat Ono, Shoham, Ganei Tikva, Yokne’am, Maale Gilboa, and Eilat. Several regional councils were also taking part.

Other cities, including Jerusalem, Lod, and Harish, announced they would not be striking.

Hebrew media outlets reported that Finance Minister Bezalel Smotrich was in talks with the Justice Ministry in a bid to issue a court order against the striking mayors, arguing that they had exceeded their authority.

The Israel Builders Association and the Manufacturers Association filed a joint petition to the High Court of Justice against the strike, arguing that it was causing great damage to business and workers while millions of citizens “against their will have become a tool in the political struggle of the authorities.”

The court gave the Federation until 4 p.m. Tuesday to respond to the petition and noted it must explain why it did not give seven days notice ahead of calling the strike, as it had committed to do.

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