Benjamin Netanyahu and Yuval Steinitz in the Knesset
Benjamin Netanyahu and Yuval Steinitz in the Knesset. Photo by Olivier Fitoussi
Text size

Israel will be starting the year 2013 without a budget in place, after Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz canceled discussions scheduled for early September on the issue. The budget discussions have been put off until after the Jewish holidays in October.

Just last week Netanyahu and Steinitz said they intended to have the cabinet vote on next year's budget before Rosh Hashanah, which is in mid-September.

For weeks Netanyahu and Steinitz have been employing delaying tactics on budget discussions. But they never wanted to have the Knesset pass a new state budget for 2013 by year-end, claim a number of senior politicians and government officials.

This explains why for the first time in Israeli history, the cabinet is not starting budget discussions for the following year in July and August, they said.

Last week, after pressure in the media and from the business community, Netanyahu and Steinitz announced they had reached agreement on the schedule for approving the 2013 budget. They even announced a timetable in which the cabinet was to have finished debating the budget and vote by September 13. But now they have decided to postpone these sessions, said the senior politicians, though neither Netanyahu or Steinitz has made any official - or unofficial - announcement on the matter.

But spokesmen for both the Prime Minister's Office and Finance Ministry said the budget would be approved by the Knesset by the end of this year.

The decision to postpone the budget debates until after the holidays is not just a bureaucratic matter; by law, the cabinet must submit the budget to the Knesset by the end of October. Since the cabinet returns from its holiday vacation only on October 9, there will be almost no time left to prepare the Budget Law and Economic Arrangements Law for next year, a process which normally takes about two and a half months. To do all this in two weeks is impossible.

The Finance Ministry stated that no decision had been made yet to postpone the cabinet meetings on the budget, though the matter is under discussion. The reason for such a postponement is the request of a number of ministers, who think they will not be ready for the budget debate before the holidays, said the treasury. It is possible that at least one of the cabinet's meetings on the budget will be held between Rosh Hashanah and Yom Kippur, said the Finance Ministry.

Steinitz supports passing the 2013 budget in the Knesset by the end of the year, yet it is not dependent on him alone but also on the rest of the coalition, over which he has no control over this, said his bureau.

Elections on horizon?

A number of MKs explained Netanyahu's decision not to push the budget as an admission he does not have a majority in the Knesset to pass it. The 2013 budget is expected to contain a large number of painful budget cuts, and many coalition parties, including Shas, Yisrael Beiteinu and even a number of Likud MKs are expected to oppose it.

The problem is that if the budget is not passed, Netanyahu might have to call early elections, which the prime minister probably does not want.

He also does not want details of the steep budget cuts to leak out of the cabinet discussions, especially as they were originally scheduled for the eve of the Jewish holiday season. He would prefer to delay these headlines to after the holidays.

If the government starts a given year without an approved budget in place, its spending is governed by the previous year's budget. Each month the government may spend a twelfth of the previous year's budget, until the new one is passed.

The government can continue to operate without a new budget through the end of March. If no budget has been passed by then, new elections become mandatory. Such elections would take place 90 to 100 days after April 1.

After the elections, one of the new Knesset's first tasks would have to be the passage of a new budget - at the very latest 45 days after the establishment of a new government. If no new budget were passed within 45 days, new elections would be called within 90 days.

Defense budget fight

The cabinet will hold a discussion today on the request of the Defense Ministry for its budget for the next five years. The idea is to allow the defense establishment to plan its next five-year plan for 2013-2017. The cabinet meeting, which will be held in Tel Aviv, will see a battle between the Defense Ministry's broad demands and the Finance Ministry's attempts to rein in defense spending.

Defense officials are expected to request budget increases in light of the challenges facing the country, while the treasury is demanding that the Israel Defense Forces streamline and become more efficient - and make due with a budget the country can afford.