Viewpoint / Rich Man, Poor City

The city of Givatayim has the reputation of levying about the highest city taxes in Israel, thanks to its prime location in central Israel and its relatively wealthy population. Yet, according to the latest figures, in 2002 it accrued a deficit of NIS 94 million, including a current deficit of NIS 14 million that built up that year alone. And, believe it or not, that was an improvement from its NIS 115 million deficit in 2001.

Givatayim is in good company. Ramat Efal, a small community of cottages near Tel Hashomer, built up a NIS 6.5 million deficit, of which NIS 3.7 million was accrued in 2002 alone. Classy Kiryat Ono, next door to Savyon, has a NIS 50 million deficit (NIS 19 million in its current account in 2002). Mevasseret Zion, in the Jerusalem hills, sports a NIS 44 million deficit, or 50 percent of its annual revenues.

The figures speak for themselves, but we'll say it anyway - they attest to dreadful management at the local authorities. Here and there, a few stay balanced, here and there are some that can under no circumstances be balanced because their populations are too poor. But most are in deficit for no good reason beyond bad management. Luxury suburbs serving rich families who do not need subsidies in order to eat say it all. If they're in deficit, it's because of bad management, pure and simple.

The bad management has become chronic because it is unpunished. The voters are apathetic; they either don't vote in municipal elections at all, or vote left-right irrespective of the city's "issues." Leaders who reduced rich cities to poverty pay no political price. The Interior Ministry, which seems ignorant of its actual function, does not regulate matters or require erring city leaders to reach conclusions.

"The authorities are a political body that is expected to function like a business even though nobody's keeping an eye on things, and its `shareholders' get reports only once every five years," say government sources following the breakdown. "How could they be expected to improve?"

Given the Interior Ministry's incompetence, the Finance Ministry took over handling the local authorities. First the Finance Ministry tried to get them to find financing by issuing municipal bonds. The ministry hoped that would force the local authorities to do something that Interior had consistently failed to do - get them to publish annual performance reports. If the Interior's growling didn't do the trick, maybe the Israel Securities Authority could get the local authorities to toe the line, as failure to file reports would be a criminal offense.

But the cities quickly discerned the problematic personal aspect of such bond issues, from their perspective, and dropped the idea. Why risk exposure in a legally binding public prospectus when they could simply usher their unpaid workers out the door, to a march on Jerusalem? Or alternatively, they could wield their political clout.

Finance Minister Benjamin Netanyahu's capitulation to Ra'anana deputy mayor Uzi Cohen, subsequent to which the treasury eschewed its plan to consolidate local authorities, undermined the move to rehabilitate the cities and slash their support, and the authorities got the message loud and clear.