Shelly Yachimovich
Shelly Yachimovich Photo by Olivier Fitoussi
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Mark Israel Salem
Israel's cabinet meeting on June 17, 2012. Photo by Mark Israel Salem

The cabinet on Sunday endorsed a measure that would make the use of two-year state budgets permanent practice.

The measure, proposed by Finance Minister Yuval Steinitz, requires approval by the Knesset before it can be enacted into law.

The proposal, which was passed by a wide margin yesterday, would require the use of two-year budgets on a regular basis, not just during election years and years of economic crisis. Because next year is in fact an election year, the state budget for the year will stand alone rather than being combined with the following year's budget.

Even if the measure is approved by the Knesset, there remains doubt regarding whether the next government's prime minister and finance minister would embrace the controversial practice.

Israel is the only country in the world that has a two-year budget system, and even here, the local authorities operate on one-year budgets.

Steinitz said a two-year budget would enable the government to better plan and implement policy. By eliminating the need to go through the budget-planning process every year, the government would free up resources for other tasks, he said.

Yet the proposal is not without its critics. Vice Prime Minster Shaul Mofaz (Kadima ) and two former Likud finance ministers, Silvan Shalom and Dan Meridor, opposed the resolution yesterday. Mofaz argued that a budget must be limited to one year in order to remain up-to-date.

Shalom claimed a two-year budget lacks necessary flexibility, and noted that the current budget, a two-year plan, has undergone no fewer than six amendments this year alone. He said the budgets for 2009-2010 and 2011-2012 were enacted as two-year budgets for technical reasons but that those exceptions should not justify making the practice permanent.

In a document provided to the Knesset Finance Committee and the Constitution, Law and Justice Committee, Sagit Afik, the legal adviser to the Finance Committee, called for further consideration of how the practice would affect the relationship between the Finance Ministry and other ministries, and also how it would affect the constellation of powers between the government and the Knesset.

Afik said the proposal would not enhance transparency in the budgeting process and would not provide for more extended consideration of the budget. On the contrary, she argued, the Finance Ministry is pushing for a policy that would require the Knesset to be dissolved if a budget is not passed by the end of February; currently, that would only happen at the end of March if the budget fails to pass the Knesset.

She also called the cabinet resolution hasty, as a joint panel from the Knesset finance and constitution committees is due to release its own recommendations on the subject.

'Anti-democratic move'

Opposition leader Shelly Yacimovich called the two-year budgeting process anti-democratic. The head of the Meretz party, Zahava Gal-On, said the practice guarantees "mistaken projections and faulty execution." She claimed that the current two-year budget has led to an increased deficit and inflated tax revenue projections, and that it hands the government a ready excuse not to address the demands of the social-justice protest movement.