Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich promised to boost funding for ultra-Orthodox yeshiva students and their families by up to NIS 250 million on Monday, in exchange for the United Torah Judaism party’s support for the state budget the government presented to the Knesset earlier in the day.
Rather than allocating new monies, a statement from Netanyahu’s Likud party confirmed, the funds will be transferred from within the current two-year budget framework, which allocates NIS 484 billion ($133 billion) for 2023 and NIS 514 billion ($141 billion) for 2024.
The NIS 250 million boost is expected to come from an already allocated NIS 3.7 billion to increase stipends to yeshiva students, who will also receive retroactive compensation to cover the full calendar year 2023. Likud specified that if further amounts are required, they could be pulled from any surplus in NIS 1.2 billion in discretionary funds already allocated for ultra-Orthodox schools.
Monday’s agreement also ends a tactical split within United Torah Judaism itself. The Ashkenazi ultra-Orthodox faction is an alliance of the Agudat Yisrael and Degel HaTorah parties, the former of which publicly came out against the budget unless given an additional NIS 600 million for religious students and their families.
The agreement removes a chief obstacle faced by Netanyahu and Smotrich as they work to secure the 61 votes required to pass the budget by its May 29 deadline, or otherwise face snap elections. The two are expected to next turn their attention to placating the far-right Otzma Yehudit party, which holds six of the coalition’s 64 votes and is also demanding more funding for its priorities in exchange for support.
In addition, far-right MK Avi Maoz threatened as recently as Friday to vote against the budget if his Jewish national identity office is not awarded hundreds of millions of shekels, as promised in coalition deals with Likud. In control of only one seat, Maoz is not necessary to pass the budget, should Otzma Yehudit firm up its support.
In addition to the NIS 4.9 billion of discretionary funds that Orthodox schools and religious scholars were allocated mid-May, another NIS 1 billion was provided for a food stamp program demanded by Mizrahi ultra-Orthodox party Shas, as well as additional funds for ultra-Orthodox education, building religious buildings and supporting Haredi Jewish culture and identity.
The combined demands enraged largely secular corners of Israeli society, who criticize state support that enables religious scholars to eschew employment and military service, and that funds private ultra-Orthodox schools which inadequately prepare children for the workforce by not being required to teach core subjects, like math, science, and English.
Political polarization crossed over into overt social tension in the past week, with a prominent television personality calling ultra-Orthodox Israelis “bloodsuckers” who “milk” taxpaying Israel, and thousands of largely secular budget protesters massing in a Haredi enclave last week, with some scuffling with the locals.
UTJ MK Moshe Gafni, who chairs the Finance Committee, addressed these incidents of “incitement” while presenting the trillion-shekel state budget to the Knesset on Monday morning.
“I’m not a sucker, I’m also not a thief. I am a citizen of Israel,” said Gafni, “and I do what I want.”
“Looking at what the left does to us, it’s clear why we’re so committed to going with the right wing,” he added.
Gafni also dismissed the notion that ultra-Orthodox schools should not be eligible for funding if they don’t teach core subjects, saying that religious students learn the real “core” — Jewish studies.
He also caused an outcry by saying he would donate clothes to Israel’s Eurovision representative, pop star Noa Kirel, an apparent reference to outfits she wears that don’t meet ultra-Orthodox standards for women’s modesty.
Opening floor debate on Monday morning, the coalition hopes to advance the budget and its attendant legislation through their final two votes by Tuesday night, although it has warned its lawmakers to be prepared to extend the process to Wednesday and even possibly next week.
Growing 5% from 2022 to 2023, the budget increases Israel’s deficit at an economically precarious time. The Finance Ministry predicts that state revenues will drop below their initial forecasts, driven both by global market contractions and market uncertainty tied to the government’s plan to constrain judicial power.
Global credit ratings agency have noted concerns, with Moody’s in April degrading Israel’s credit outlook in light of “deterioration of governance,” connected to shaking up the judiciary.
Inflation and cost of living both continue to rise, but despite cost of living being a central campaign promise from Likud and ultra-Orthodox parties, the budget contains no significant measures to combat structural price drivers.
Smotrich has dismissed criticism on failing to address the cost of living, pointing instead to plans to help develop less economically prosperous regions remote from Israel’s financial center. This includes a contentious plan to reshuffle a portion of municipal tax payments from commercially strong, centrally located cities to far-flung areas that lack robust local businesses.
As coalition whip and Likud MK Ofir Katz told the Knesset on Monday morning, “There are a lot of local authorities that will enjoy benefits from this law, a lot more than will not enjoy benefits from it — and those are mostly in the center” of the country.
Revealing his discomfort with the size of the planned expenditure, Smotrich has acknowledged that the budget has swollen to accommodate “promises to coalition partners.”
Many of these promises are funded through discretionary funds, which increased from NIS 0.9 billion in 2021 and NIS 1.2 billion in 2022 to NIS 13.7 billion for the two year, 2023-2024 budget.