Expect a Stormy Budget Debate

The cabinet may have given its backing to its proposed 2015 budget bill, but the battle over passage by the Knesset is just beginning.

Knesset Constitution, Law and Justice Committee chairman MK Nissan Slomiansky.
Emil Salman

In just over a week, the Knesset will reconvene for its winter session and front-and-center on the agenda will be the 2015 budget, which the cabinet approved just before the Sukkot holiday but must be passed into law, perhaps with changes that the opposition will manage to push through. This parliamentary session promises to be particularly stormy – and not only over the budget – particularly due to divisions within Prime Minister Benjamin Netanyahu’s own governing coalition.

Consideration of the budget by the cabinet was delayed in part by this summer’s war in the south, and it will only be submitted to the Knesset for consideration in mid-November, instead of the end of October. That in turn puts final passage of the budget bill in doubt, even though the new budget is due to take effect on January 1.

The delay leaves the Knesset Finance Committee just four weeks for its own hearings on the budget before the legal drafting of any changes to the legislation is carried out, to be followed by submission to the Knesset plenum.

Finance Committee chairman Nissan Slomiansky of the Habayit Hayehudi party, a member of the governing coalition, has already warned that his committee’s consideration of the budget could extend into next year, delaying passage by the Knesset. The Finance Committee will not serve as the government’s rubber stamp, he vowed.

“The 2015 budget bill is not simple for an economy that is already in a slowdown,” Slomiansky said. “Since it was approved at one cabinet session when most of the ministers were not present, [instead] leaving written instructions on their vote, responsibility for examining it falls on the Finance Committee.”

Slomiansky and many of his Knesset colleagues view the proposed budget as less than a done deal. He tends to agree with Bank of Israel Governor Karnit Flug, who has warned that the proposal is based on overly optimistic tax revenue projections, meaning that in practice the deficit will exceed the Finance Ministry’s forecast of 3.4% of the country’s gross domestic product. As Slomiansky sees it, spending next year will also exceed what the budget provides for.

“During the course of the year [2015], they will see that there is no alternative to raising taxes or cutting ministry budgets, or heaven forbid, raising the budget deficit,” he warned. His committee will not agree to hiking the deficit in the middle of the year, or to carry out spending cuts or tax increases, he insisted. And he also expects his committee to receive requests during the course of next year for increases in defense spending, he added.

Slomiansky expressed concern, among other austerity measures, over cuts to two of the ministries controlled by his right-of-center Habayit Hayehudi party, at the core of which are voters from the National Religious Party. He promised to scrutinize funding cuts for the two ministries – the Public Diplomacy and Diaspora Affairs Ministry headed by party leader Naftali Bennett, who also serves as Economy Minister, and the Pensioner Affairs Ministry headed by Uri Orbach.

It should be noted that the budget approved by the cabinet includes a 5 million shekel ($1.3 million) increase in funding in the city of Jerusalem and another 25 million shekels for programs aimed at strengthening Jewish identity.

Knesset sources have expressed the belief that some of the cuts contained in the proposed budget will be reversed in the course of the legislative process. In addition, “along the way,” they predict, Slomiansky will bargain to increase funding for West Bank Jewish settlements, where his party enjoys significant support. The government’s proposed budget already includes a 30 million shekel funding supplement for local governments in West Bank Jewish settlements.