Cabinet to Vote Today on Budget Cut to Finance Bus Subsidies

Half the money, NIS 150 million, comes from a 1% across-the-board cut to all government ministries except the Defense Ministry.

The Finance Ministry is scheduled to bring a NIS 300 million budget cut to the cabinet for approval today.

The cut, to the 2011 and 2012 budgets, is intended to finance a subsidy for public transportation that Prime Minister Benjamin Netanyahu announced a week ago, as part of a plan designed to counteract public protests over price increases. It is expected to receive majority support in the cabinet.

Half the money, NIS 150 million, comes from a 1% across-the-board cut to all government ministries except the Defense Ministry.

The other half is being cut directly from the Transportation Ministry's budget to develop intercity roads over the next two years, and Transportation Minister Yisrael Katz is expected to object to the plan for that reason.

However, it will not affect any of the roads included in the government's flagship multiyear project to upgrade the nation's transportation grid.

The Defense Ministry, which is being exempted from the 1% cut, happens to be the ministry with the largest budget. But the Brodet Committee, which set the defense budget for the years 2008 through 2017, said it should be exempt from any cuts, and the government accepted its recommendation.

The Education Ministry will also get a partial reprieve: Its budget is being cut only by 0.5%. However, the higher education budget is being cut by the full 1%.

Finance Ministry sources noted last week that Katz and fellow ministers Moshe Kahlon and Eli Yishai had urged the government to cancel the January 1 increase in the gasoline excise tax and to make up the lost income from somewhere else in the budget. Katz had been harshly critical of the Finance Ministry's decision to raise the excise tax by 23 agorot per liter, the sources said.

Netanyahu and Finance Minister Yuval Steinitz announced the plan to increase the subsidy for public transportation by NIS 300 million at a press conference a week ago.

Steinitz urged that the cut to be voted on today, independently, instead of being combined with an additional cut the government is expected to approve to make up for the income that will be lost by canceling the gas tax increase and raising the minimum wage by NIS 450 a month. He said this was for educational reasons - so ministers would understand that they could not overspend the state budget, even by small sums.

The Finance Ministry proposed that the NIS 300 million subsidy for public transportation should apply to both buses and trains. It will be used to decrease the price of monthly bus passes by 10%, to decrease bus fares in the periphery by 10% and to improve service in large cities. In addition, the price of monthly train passes will be reduced from 26 regular fares to 23.