The Bottom Line / First, a recovery program
The crisis in the local authorities, which stems from the NIS 950 million cut in the "balancing grants" that the government gives towns in the red, has reached the boiling point.
The crisis in the local authorities, which stems from the NIS 950 million cut in the "balancing grants" that the government gives towns in the red, has reached the boiling point. The ongoing labor sanctions in the authorities, the nonpayment of salaries to thousands of workers for months on end and the authorities' ballooning debts have forced the Finance Ministry to come up with a way to solve the crisis, and the assignment was given to Minister Meir Sheetrit, who began meeting with the heads of the local authorities yesterday.
According to Sheetrit, the authorities' cumulative deficit totals some NIS 6 billion. In addition, they owe the banks about NIS 15 billion. Sheetrit has harsh things to say about successive interior ministers, who permitted the authorities to spend wildly and take out bank loans; about the authorities' accountants, who failed to provide warnings about the waste; and about the banking system, which gave the authorities high-interest loans in the belief that the government would eventually pay the bill.
There is no doubt it is easier to demand that the banks write off or reschedule the debts than to demand that mayors cut their salaries, fire their deputies, sell assets and merge their towns with neighboring ones in order to reduce expenditures. And it is true that the banks sometimes acted like ostriches in agreeing to give the authorities credit on the strength of a note from the Interior Ministry. But the demand that they write off the authorities' debts is impractical because, in the end, the cost of the write-off will be passed on to the banks' customers.
For some reason, Sheetrit has nothing to say against his fellow politicians - including members of his own Likud party - who for years caved in to the pressure exerted by fellow party members in the local authorities and signed the checks without a murmur. Nor does he have a word of criticism for the mayors, some of whom are from his own party.
But Sheetrit also knows it is the inflated salaries paid by the local authorities to their senior officials, along with the corruption and the failed management, that have brought the authorities to their present pass, where they can no longer even pay their workers' salaries. And the authorities are essentially holding the workers hostage to increase the pressure on the treasury. They have continued to make regular payments on their bank loans - apparently because the banks' ability to garnish funds transferred to the authorities by the treasury poses a much greater threat than protest demonstrations by hard-up workers.
The only way to solve the local authorities' crisis is by implementing a recovery program that will include cutting wages, firing staff, merging authorities, selling assets, collecting unpaid municipal taxes, canceling tax exemptions given to mayoral cronies and making the treasurers of deficit-ridden local authorities subordinate to the treasury's accountant general, instead of to the mayor.
That would admittedly turn the elected mayors into clerks who have to obtain permission from the treasury for every expenditure. But that is essentially what they have made themselves, by running to the treasury and demanding that it cover their deficits.
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