Eli Yishai - 8.1.12
Interior Minister Eli Yishai, Jan. 8, 2012. Photo by Emil Salman
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The Union of Local Authorities reached an agreement with Interior Minister Eli Yishai Monday that could freeze cuts in property tax, but close to midnight, the Prime Minister's Office rejected the agreement. As a result, the strike by Israel's cities and towns - which was prompted by the tax cuts and other municipal budget reductions - will continue for the second day Tuesday.

Yishai told the ULA representatives he would act to convince Prime Minister Benjamin Netanyahu to ratify the agreement.

As part of the strike, local authorities are not collecting garbage and municipal offices are closed to the public. Teachers' assistants at public preschools and kindergartens are among the municipal employees on strike.

Netanyahu had met previously with local authorities, but did not meet with them again yesterday. At a meeting of his Likud faction yesterday, the prime minister called for an end to the strike.

"Most of the things can be dealt with within a short time, and I call on the mayors to stop causing harm to the residents," he said.

The proposed agreement would suspend virtually the entire property tax (arnona ) reform plan than Yishai unveiled about three weeks ago. The compromise would provide for a joint task force to examine the economic impact of changes to tax rates.

In addition, related private members' bills pending in the Knesset, including one that would exempt rehabilitation and occupational centers from paying property taxes, will be stopped. Municipal water rates would also be reexamined.

Local officials have also expressed concern about new limitations on corporate contributions to municipalities. The limits were proposed out of concern that such donations created a conflict of interest between local governments and businesses that require municipal permits. The deal with Yishai requires the interior minister to demand that the Justice Ministry make it clear that businesses will be allowed to continue to donate until the new restrictions formally take effect.

Municipalities had also expressed displeasure over a new formula that would redistribute the division of the Mifal Hapayis national lottery proceeds between the national and local government. The tentative settlement with Yishai provides for the current 50-50 split to remain in place.

The Prime Minister's Office issued a statement saying that Netanayu had personally intervened on the issue and had met with representatives of the Union of Local Authorities to prevent the strike.

Netanyahu also directed the director general of his office to examine additional funding sources for the municipalities, adding that the ULA had previously rejected the prime minister's proposals.

Earlier yesterday, Likud mayors attempted to pressure the ULA to end the strike.

Upper Nazareth Mayor Shimon Gapso asked Buhbut to comply with Netanyahu's demand that the strike be halted in favor of negotiations. Municipal staff in Upper Nazareth would not be striking, Gapso said.

On the other hand, Hadera Mayor Haim Avitan, who is also affiliated with Netanyahu's Likud party, said he would act in accordance with directives from the Union of Local Authorities. The mayor of the West Bank settlement of Ma'aleh Adumim, Benny Kashriel, who heads the ULA's Likud faction, said Gapso was acting on his own initiative.

Gapso called for an end to the strike in an effort to spare the public the disruption, noting that Netanyahu had promised to deal with the allocation of lottery funds by the end of the month and to deal with the other issues in February.