No Budget to Cover the Cost of a New Election, Israel Finance Ministry Says

As deadline for Netanyahu to form a coalition looms, Treasury estimates new elections would cost 475 million shekels 'for which there’s no money in the budget'

An Israeli man casts his vote during Israel's general elections in Tel Aviv, Israel, Tuesday, April 9, 2019.
Sebastian Scheiner,AP

Another round of elections may be just around the corner, but it emerged on Tuesday that neither the treasury nor the parties themselves have the money available to cover the costs.

Bayan Wattad, of the Finance Ministry’s budget division, told the Knesset House Committee on Tuesday that the treasury had no reserves in the budget to cover the costs of a second election in the space of six months.

“The meaning of the proposed law dissolving the Knesset is a cost of at least 475 million shekels [$131 million], for which there’s no money in the budget at a time when we are already spending more than budgeted,” she said. “The government will have to find a source for this spending, which will have to come from less spending on other activities,” she said.

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Wattad’s estimate came a day after the Knesset passed a preliminary bill to dissolve itself amid a standoff between Netanyahu and Yisrael Beiteinu leader Avigdor Lieberman about terms for forming a new government. If the dispute isn’t been resolved by a Wednesday deadline to form a new government, the bill may well pass the rest of its required votes, leading Israel to another snap election.

The election costs include 200 million shekels in subsidies for party campaign costs and 250 million for conducting the election itself. However, back-to-back elections mean the state won’t be subsidizing the cost of primary election campaigns.

Wattad didn’t relate to the cost to the economy of an Election Day holiday, which is usually put at more than 1 billion shekels.

What could help offset part of the cost is the fact that another election will save the state the costs connected with the outgoing government’s coalition agreement, which is estimated at 2.25 billion shekels annually.

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The parties themselves, which are still saddled with unfunded costs from the last election on April 9, will have trouble finding the money to pay for a new round of voting – a matter that came for discussion at the committee meeting on Tuesday.

“The parties that took loans to finance their last election campaigns, are repaying them in monthly installments,” said Miki Zohar (Likud), the committee chairman. “Knesset members have asked to delay repayments during the coming months so they will have money to cover the cost of the next elections, which could happen in another three months.”

MKs noted that another problem the parties face is that under the law, the value of outstanding loans are automatically deducted from any advances they get on government subsidies. A party whose outstanding loans are equal to half or more of the aid due aren’t entitled to an advance at all, they said.

Given the unusual situation they face of back-to-back elections, MKs said the rules should be waived.

Haim Avidor, the Knesset’s comptroller, stated that the parties had been granted 62.5 million shekels in loans to date under the Party Finance Law. To date the only party that has used its entire quota was Meretz, which has taken 7.4 million shekels. If all the parties were to use their full allocations, the government’s exposure would grow to 201 million shekels, he warned.

So far, the Likud has taken 36 million shekels in loans while Labor has taken 2 million, Yisrael Beiteinu 2.3 million, Jewish Home 2.9 million, Agudat Yisrael 3 million, Degel Hatorah 6 million, Raam 1 million and Balad 1.7 million, Avidor said.

“So long as a party is able to enter the 22nd Knesset there should be no problem repaying, but it will be hard to collect from a party that fails to,” Avidor said.