Smotrich’s suspension of funds to local authorities

Smotrich’s suspension of funds to local authorities

9 August 2023

Two days ago, Finance Minister Bezalel Smotrich of the extremist right “Religious Zionism” party unilaterally suspended $55 million in budget money that had been approved by the previous government and earmarked for developing the economy and improving the infrastructure of Arab communities inside Israel’s Green Line borders, while combating rampant crime there.

Netanyahu’s Finance Minister, moreover, suggested the suspension could become permanent, noting that the current coalition was under no obligation to respect the previous government’s commitments. That government, under prime ministers Naftali Bennett and Yair Lapid, had seen the first-ever participation in a governing coalition by an explicitly Palestinian-Israeli party, “Ra’am”, which used its leverage to secure these long-overdue budget allocations.

But to understand the full gravity of Smotrich’s actions, we need to go a bit deeper:

Municipal government in Israel works very differently than in the US, where local leadership enjoys substantial autonomy and authority, and where funding of municipal services is largely a local affair. In Israel, municipal authority is much more limited and subject to government intervention, with major portions of municipal budgets funded by the national government. This is particularly true for education, public welfare, religious and cultural services, day care, and local law enforcement/police.

However, when it comes to infrastructure (water and sewer services, local roads and road maintenance, local parks), the money for which might now be taken away, local authorities are left to fend for themselves. This is a particular problem for many Palestinian-Israeli majority communities due to Israel’s large Jewish/Arab income disparity. The overwhelming majority of Palestinian-Israeli communities suffer from disadvantaged socioeconomic conditions with fewer and less remunerative employment opportunities and greater unemployment. This translates into weaker municipal budgets for providing essential services.

“Balancing grants” by the national government have long been the solution, but such grants are a political decision, as Mr. Smotrich has now made clear, and the withdrawal of such money is sure to leave Arab local authorities reeling.

Even before the Finance Minister’s recent move, we should note, chronic discrimination has meant inequitable distribution of funds, with less money going to locales with Arab majorities. And in “mixed” cities with substantial Palestinian-Israeli minorities, funding for services is allocated unequally between the Jewish and non-Jewish populations. In other words, even if Smotrich recants and releases the money, the discrimination problem will be far from resolved.

Mark Gold
Treasurer, Partners for Progressive Israel



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