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Only 30 local authorities have thus far signed a recovery program, out of 138 authorities that need one. Fifty-one authorities are currently working on their draft programs. And meanwhile, thousands of local government workers have not received their pay.

Both the local authorities and the Interior Ministry agree that the cut in the central government's "balancing grant" to the local authorities was too severe, and that is what pushed even the more stable and better managed councils into trouble. But an internal treasury document shows that the crisis did not start this year, but earlier.

Most local authorities finished 2002 with a sizable operating deficit, and some of them - like Yavneh, Ramle, Migdal Ha'emek, Arad, Mazkeret Batya and Taibeh - took the bull by the horns and responsibly implemented a recovery program. But others continued spending money like water and ended 2003 - a local government election year, what a coincidence! - with an even greater deficit. For example: Hatzor Haglilit increased its spending by 29 percent and upped its wages by 3 percent, but reduced its collection of municipal property tax (arnona) by 28 percent. Kafr Kassem spent 8 percent more, increased its wages by 4 percent, but took in 8 percent less in arnona. And Ofakim, which increased spending by 4 percent and pushed up its wages by 15 percent, at the same time reduced its arnona collection by 17 percent.

The crisis is not even just a result of the past few years. The seeds were sown back in 1984, when Shas took over the Interior Ministry and held onto it (except for short periods of time) until 2003.

At the Caesarea Conference last week, Transportation Minister Meir Sheetrit said that the original sin had been the move from decentralization to centralization, and blamed former Shas leader Aryeh Deri for concentrating all the power and the budgets in Jerusalem while castrating local powers.

During those years, if a council head or mayor agreed to build a new synagogue, kollel (religious studies institute) or mikveh (ritual bath), he would receive a tidy sum from the Interior Ministry, and no one checked whether he was overspending at all.

Accountants appointed as overseers of local government would prepare their annual reports at year's end, only to find that no one took a bit of notice. No mayor got the rap for failing to cut back or streamline. No mayor was obliged to meet any recovery plan. And many authority heads turned their local councils into job centers for their Shas colleagues.

Deri also vastly increased the number of council members, to allow more Shas representatives onto the councils. The result was eight to ten factions on a council instead of the previous four to five, which made the boards almost impossible to manage.

In March 2003, Interior Minister Avraham Poraz and Finance Minister Benjamin Netanyahu submitted a plan to shrink the number of local authorities from 266 to 150 and to cancel 270 paid deputy mayor positions. Had that been implemented, the savings would have run into the hundreds of millions. But the heads of the authorities - with their powers in the Likud Central Committee - rose up in protest. Netanyahu and Sheetrit (then a minister in the treasury) panicked and gave in, and of those grand plans, next to nothing remain.

And now, as the government prepares to debate the 2005 budget, the subject does not even merit a mention.