Israel, JNF Move to Resolve Dispute Over Revenues

Compromise would have organization transfer 1 billion shekels to state in 2015; treasury to drop some previous demands.

Eliyahu Hershkovitz

A dispute between the Finance Ministry and the Jewish National Fund over plans to divert revenues earned from JNF-controlled land into national infrastructure projects moved closer to a resolution on Sunday after the treasury withdrew a number of its key demands.

Treasury and Justice Ministry officials described Sunday's meeting with JNF officials at the Prime Minister’s Office as “positive” after several compromises were reached, but they cautioned that several critical issues remain unresolved.

The JNF agreed to transfer some 1 billion shekels ($270 million) of its revenues to the state in order to fund projects that are consistent with the goals of the 2015 national budget, namely to increase the supply of housing and help bring down prices. A large part of this sum will be directed to infrastructure projects whose purpose is to facilitate massive residential construction.

In the latest talks, treasury officials backed down on plans to make JNF income a part of the regular state budget, controlled by the PMO and supervised by the Finance Minister, thereby preserving a large degree of the organization’s autonomy. Under the compromise, the money would be allocated by a joint committee composed of government and JNF representatives.

The JNF is famous for the now-iconic Blue Box, or pushke collection tin that for more than a century has had a place of honor in Jewish homes and institutions, their contents used to buy land on behalf of the Jewish people.

Representatives of the organization argued that the treasury’s plan — first made public last week as part of the Economic Arrangements Bill (hok hahesderim) accompanying the 2015 draft budget — would deprive it of its property rights and would run counter to a 1961 pact that provided for JNF land to be managed by a government agency: the Israel Land Authority, formerly the Israel Lands Administration.

Until now, revenue from land leases went straight to the JNF, to spend as it saw fit. Eran Nitzan, a deputy budget director in the Finance Ministry, said the compromise would ensure that JNF spending was aligned with the government’s priorities, particularly in regard to housing.

The two sides remained at odds over whether the 1 billion shekel transfer would be a one-time allocation for the 2015 budget, as the JNF wants, or an annual commitment, as the treasury is demanding. The treasury also refused to give up its plan to make the tax benefits the JNF enjoys conditional on its directing at least 65% of its income to government-designated national projects.

According to figures the treasury released to justify its move, the JNF today controls 2.3 million dunams (575,000 acres) of land, amounting to 11% of Israel’s land area. Not counting the Negev, a mostly desert region that comprises about 60% of the organization’s holdings, the JNF controls 22% of Israeli land.

“Over the last several years, the JNF income from its lands came to about 1.17 billion shekels on average,” the Finance Ministry said in a response statement, adding, “It’s not logical that we don’t demand this money from now on.”

The move is the latest effort by the government to gain closer control over the giant organization. Six weeks ago, it redesignated the JNF as a so-called public benefit company, which would subject it to greater government supervision.