Several major municipalities strike over coalition plan to redistribute local taxes

Several major municipalities went on open-ended strike Monday, closing schools and suspending garbage collection and welfare services to protest a government plan that will take a large chunk of the taxes they collect from local businesses.

Among the cities 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.

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

Ashkelon and Yavne joined the strike, but kept their schools open after having shut them during last week’s rocket fire from Gaza.

In striking cities, schools from kindergarten up were shuttered, garbage collection and welfare services were halted, municipal inspectors stopped handing out fines and city offices were closed to the public, as were libraries, cultural and sports centers.

Special education and matriculation exams were exempt from the strike.

The Federation of Local Authorities in Israel, representing about 200 Israeli municipalities, announced the open-ended strike until the coalition backs 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 regarding the Arnona Fund, in a statement Sunday announcing the strike. “It is not our job to worry about budgetary resources to solve national crises”

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.

The plan will take a percentage of property taxes collected from local businesses, though not from residents, to be put into a fund that will go to help indebted and poorer municipalities. As such, the law will disproportionally affect cities with thriving business areas or industrial parks.

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.

They also accuse the coalition of planning to use the funds to pay for sectorial 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 Arab municipalities are less likely to benefit.

MK Meir Cohen of the opposition Yesh Atid party said Monday that while the aims of propping up weaker sectors were good, the path chosen by the government to bulldoze the municipalities was destructive and vindictive.

“I’m not totally against it. But what the government did was so unnecessary. We have to encourage strong cities and weak cities,” he said speaking to the Kan public broadcaster. “The finance minister needs to take this out of the Arrangements Bill and come to an agreement” with the Federation of Local Authorities.

Cohen, a former welfare minister, called the move an “ugly hijacking” and said that the mayors deserved to be treated better.

Finance Minister Bezalel Smotrich on Sunday vowed there would be no compromise with the mayors, saying they “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.”

Mayors from ultra-Orthodox towns said that the move came to address longtime injustices.

Elad Mayor Yisrael Porush said that his town was established with only 3% of its area zoned for businesses, whereas secular towns had much more.

Calling ultra-Orthodox towns “ghettos,” Porush told the Kan public broadcaster that “Israel has set up some 200 local councils, why do only Haredi cities not have places for business or work?”

The ultra-Orthodox community has the lowest percentage of participation in the workforce, with many men choosing to instead study Torah full-time. Critics also say that the refusal of their schools to properly teach core secular subjects leaves them unprepared and without the skills necessary to join the workforce.

Meanwhile, Interior and Health Minister Moshe Arbel from the ultra-Orthodox Shas party said Monday the strikes were politically motivated against the government, even though several of the striking cities are run by the ruling Likud party.

“The decision of several councils to strike today is a political decision against the government,” he said speaking to Radio Kol Beramah. “We will take from the strong and give it to the weak.”

However, he promised that “we will make sure not to financially destabilize the authorities.”

The head of the local government federation, Modiin Mayor Haim Bibas, slammed the government for disinformation on Monday.

“To those who are anonymously briefing [the press] that the Arnona Fund will boost the periphery and hurt the strong cities: the fund will seriously harm Eilat, Yeruham, Beit She’an and a long list of other cities,” Bibas tweeted. “Don’t let them fool you.”

“We will continue to oppose with all our power those trying to harm the citizens of Israel,” he said.

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, 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, also of Likud, 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.

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.

The fight even spilled over into Likud party internal politics, with the 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 Mayor Ron Huldai said “we have no choice” but to strike, 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).

Carrie Keller-Lynn contributed to this report