As Deadline Looms, Knesset Set to Begin Voting on State Budget

If the budget is not passed by Thursday, Netanyahu’s government will be forced to resign.

Members of the Knesset Finance Committee discuss the state budget, November 15, 2015.
Olivier Fitoussi

By law, the government of Prime Minister Benjamin Netanyahu must pass the budget by Thursday or the government will fall. Although it has been parliamentary practice for the past 30 years for the Economic Arrangements bill — supplemental legislation that accompanies the budget — to be voted on first, the current government is taking no chances. Rather than risking an opposition filibuster that would cause it to miss Thursday's deadline, the coalition will put the budget itself to a vote on Wednesday.

Even though it is the middle of November, the Knesset will be voting on a two-year budget, covering this year and next. The 2015 budget was never passed last year because of the breakup of Netanyahu’s governing coalition, which was followed by elections in March of this year and a new government with Netanyahu again at the helm. In the interim, the government has been functioning on a month-to-month budget based on 2014 spending provisions.

Voting on the provisions of the budget bill is slated to begin on Wednesday at 2:45 P.M. and is expected to continue until 5 A.M. Thursday. The bill provides for 383.8 billion shekels ($98.2 billion) in 2015 spending and 424.8 billion shekels ($108.6 billion) in 2016. A vote on the Economic Arrangements bill, which will follow, is expected to last until 9 A.M. Thursday, due to reservations that the opposition has filed with respect to specific provisions.

The governing coalition and the opposition sparred in the Knesset House Committee on Tuesday after the committee decided that the 32,000 reservations that the opposition has filed on budget provisions will be voted on in clusters rather than individually. However, the streamlined procedure will still require Knesset members to cast a vote about 600 times on the objections. Individual votes on all 32,000 reservations would have taken about 266 hours.

Assuming that there are no major surprises and that the budget is passed essentially as currently proposed, the approaching vote prompts the question of who are the winners and the losers. In a sense, Netanyahu will be a winner simply by virtue of the budget passing, as it allows him to stay in office. Barring other coalition crises, he doesn’t face a similar deadline until March 31, 2017, when his government would be forced to step down if the 2017 budget doesn’t pass. In the interim, the prime minister is expected to try to shore up the bare-bones majority of 61 seats in the 120-seat Knesset by attempting to bring the opposition Zionist Union, headed by Isaac Herzog, into the coalition.

Finance Minister Moshe Kahlon (Kulanu) will also have accomplishments to show for himself once the budget and the Economic Arrangements bill are passed, as they include a number of reforms, including policy changes designed to encourage competition in the food sector through the introduction of more food imports, as well as reforms in the real estate sector, pensions and other fields. Speaking to his Knesset faction, Kahlon also boasted about a “historic agreement” with the defense establishment that includes major efficiency measures and greater transparency, along with a 50% pay raise for soldiers doing their compulsory service.

The finance minister also stood his ground regarding implementing the recommendations of the Sheshinski II committee, which provide for a windfall profits tax on the exploitation of natural resources from mining and the like.

For Defense Minister Moshe Ya’alon, the agreement with Kahlon’s Finance Ministry not only provides for streamlining of the defense establishment, but also additional military funding and a reform of the Israel Defense Forces pension system for career soldiers, giving one-time grants instead of long-term pension payments to many leaving the army. Still, Knesset observers expect the military to try to soften some of the budget provisions and to boost funding beyond what has already been promised.

And what about the public at large? The new government promised to lower the cost of living and even before the passage of the budget, the value-added tax rate was lowered from 18% to 17%. In the budget itself, there is little in the form of new austerity measures.

But spending this year has been hamstrung by the absence of a budget. New spending has been limited, requests for funding unanswered and work plans and some reforms unfulfilled. And despite promises that the public would not face austerity measures, there are a few hidden away in the thousands of pages of budget legislation. They include an across-the-board cut to ministry budgets, which this week was increased by 0.7% to fund projects that individual Knesset members insisted on — in the process providing hundreds of millions of shekels in public funds to sectoral interests favored by the Knesset members.