First Session: "The Crisis in Local Governments in Israel"

Minister of Interior, Mr. Meir Sheetrit, about the local authorities' budget crisis: "It is obvious that there is a crisis in the local authorities, at least in some of them – but it is important to keep in mind that most of the authorities are run properly. The Ministry of Interior intervenes in crisis situations. As to collection rates – one of the problems is the gap in per capita income and spending between the Jews and minority sectors. The main reason for the gap is the authorities' inability to collect property taxes. This is unacceptable. This situation requires a real solution, which is why I was forced to disband 17 authorities, of them 14 Arab authorities, and were it not an election year, we would have disbanded 8 additional Arab authorities. Arab villages receive three times as many grants as their Jewish counterparts. I refuse to accept the claim that these citizens can pay for everything except for property taxes, sewage and water – indeed they pay for electricity, television and other commodities. Unfortunately, law enforcement is very lacking, because of the clan-culture. We have appointed a new committee, headed by Yaakov Shani, which will try to alter the "balance grant" allocation process. I agree with the claim that unequal distribution of educational resources is outrageous. It's utterly scandalous. That is why I have proposed a new system, which will grant poorer villages more money for education. My job as Minister of Interior is to ensure that every citizen – Jewish, Muslim, or Christian – receives services at an adequate level. If the local authority cannot provide that, it is my job to replace the council. In the villages where I appointed the council, the increase in collection rates is enormous. When you have good leadership, everything works better."

MK Ophir Pines-Paz, Chairman of the Knesset's Internal Affairs and Environment Committee: "If the treasury gave 600 million NIS, this whole discussion would no be taking place. One must reexamine the Gadish Formula from all possible angles – there are many distortions and irrelevant aspects to the formula. Meir Sheetrit is correct to bring up the issue of management, but dear friends, we have ignored the institutional discrimination against Arabs. Let's not mince words, because enough is enough. All the claims about mismanagement – they're all true, but if there is a shortage of income – and there is – then what are we talking about? If we want to make a change, that is what we need to change. We could redirect money in collection rates, but the question is what we want to achieve. Because, at the end of the day the, gaps are growing and we are those who have been perpetuating them for so long. I don't think that merging authorities is the key – those things usually don't work. The goal of the mergers was to equalize the level of service in rich and poor councils, and not just to save money. The municipality law – we're working on it, but it is a minimal law. We need to expand it so that instead of binding the Ministry of Interior and the local governments, it binds the central government and the local government."

Minister of Finance, Mr. Roni Bar-On: "When I represented the municipality law, the "Big" one, I stated that immediately after passing the law, we must pass the local government basic law, to complement it. The municipality law is the first level, and once the draft is presented, we will be able to regulate the legal, upper level."

Paz Pines: "Meir Sheetrit and I initiated raising the votes threshold. We were unable to pass the bill, despite the fact that the Kadima and Labor parties support it very much. In the municipality law, we wish to downsize the number of council members, while providing them with more tools –this also we were unable to pass because the Knesset is such a group of small parties. But we didn't give up. I hope that the municipality law will pass by the end of this year.

MK Menahem Ben-Sasson, Chairman of the Knesset's constitution, Law and Justice Committee: "We think that improvisation and bursts of progress will solve our problems. The current Minister of Interior tries to tell you that today Yaakov (Shani) is trying to solve the problem because Gadish is already dead; another time we'll need to update the temporary solutions that he comes up with. If we continue to think that local authorities are marionettes that can be manipulated from above, and at the same time supervise collection of dog droppings, parking, etc… Therefore the combination we call policy, which is full of sudden commands, supervision and miniscule details, takes me back to the middle ages – which I taught and still teach at university. The secret to the Jewish People's success was that the central organization dealt with general issues, and the actual application of the issues was decided inside the communities. The idea of a supervisory accountant (to the local authority) is convenient for a while, but will undermine our democracy even more. We can start with a contract between the government and the local authorities, which will lead to the basis of a constitution. We already have several versions – we will collect these things and construct them."

Adi Eldar: "Those who actually run this country’s internal affairs are the local authorities. We are the ones who answer to the citizen. If I went shopping with my wife last night, at least ten people came up to me at the supermarket with their problems. I can't just say "I have an office," I have to provide an answer to every aspect of life in the State of Israel. The State of Israel is plagued by an unbelievable rate of minister turnover. I don't think there is another country in the world in which the Minister of Interior is replaced every year. From our point of view, when the Minister of Interior is replaced, we have to start from square one. It's simply unbelievable."

Bar-On: "When I left (the Ministry of Interior), you were happy to start over."

Eldar: "Some of the issues don't come up in research, mainly the tasks that face the local government every morning. For example, the State of Israel decided to provide food for the poor (students). We appreciate the decision, but the government does not fund it. No mayor can afford to have the young kids unfed. That, in itself, adds half a million NIS to the budget, which isn't paid for. It is the same with the Nahari Law, which ruled that the educational systems be equalized – 400 million NIS and no funding. Minister Yuli Tamir is going to force us to pay 200 million more, like Limor Livnat did before her. School transportation – 300-400 million: Where are we going to get the money?! Then people are surprised when we fall apart, and claim mismanagement, corruption? Whenever we start a struggle for anything, some of the treasury's reporters suddenly write that the mayors are corrupt. I don't know how the ministers were able to bring themselves to cut a billion NIS from the authorities' budget in 2003. The Minister of Finance was Netanyahu, and Poraz was Minister of Interior. The state is paying for that billion to this day. We can't handle it. Balanced authorities are pushed into debt. In 2002, 120 authorities received the minister's award for a balanced budget, and after cutting the billion, almost only the regional councils received the award. The government signs wage agreements and wants us to meet them. We have nowhere to fund them from. Local authorities in Israel have no money. In my opinion, we are intentionally kept under funded, to keep us dependant on the central government. If the central government were reasonable, it would return that billion NIS and more. The local authorities fund education and welfare at the cost of billions. When discussing the independence of the local authority, every entering Minister of Interior says "gentlemen, I'm going to give you authority." These are just vain words."

Bar-On: "At least the things I've done weren't only promises. We freed the authorities from their dependence on local committees. My disagreement with Eldar is mainly about the way in which to present the financial data – when we're talking about "balance grants", it's difficult to catch up with the budget cuts of 2003. But since 2002 there has been a rise. Why do you fail to mention that this year we exempted you from employer's tax? That we gave you a discount on municipal taxes? All these things set the tab straight.

Shawki Khatib, Chairman of the Supreme Arab Monitoring Committee: "I would like to remind the Minister of Interior the importance of the local government in the Arab sector: it is the most important body, a body that expresses the power of the Arab Public, which is not represented by the central government. If today the government and the Minister of Interior continue to see the local authorities as numbers… they'll keep on missing the opportunity to deal with the Arab authorities' problems. How could the Minister of Interior disband so many authorities? It's unbelievable. It has no positive effect in the long term. We need a rooted plan. As for the voting threshold – I believe we should raise it."

Stas Misezhnikov, chairman of the Knesset's Finance Committee: "I visited Beer Shava, and encountered a problem – what happens with the authorities that are recovering? What kind of incentives do they have when they are no longer eligible for a balance grant? Flat budget cuts are made in the middle of the year. How can you cut 6 million NIS from Hatzor Haglilit's budget in the middle of the year?"

Bar-On: "There have been no flat budget cuts in the past three years."

Misezhnikov: "How do you explain the protocols of the committee's deliberations? Mr. Minister, consider the finance committee's deliberations in constructing the national budget. I know that there is a reserve of 700 million NIS that wasn't forwarded to the local authorities."

Sheetrit: "The additional 250 million NIS was agreed on by me and the Minister of Finance. That is a fact. It was a compensation for the wage agreement. There were no flat cuts in grants this year, or in the previous two years, there was a balance with the Gadish Formula. That is why some of the grants intended for the authorities were cut – but basically the amounts remained the same."

Shmuel Rifman, head of Ramat Ha'negev local council: "The root of all evil in the local governments is partisanship, politics. As long as that doesn't change, the situation will remain the same. The existing structure, which is political and partisan, is everyone’s clearing house; all of the parties take care of their friends and associates at the expense of the local authorities. The municipality law is bad any which way you look at it. At the foundation of the law is a clear attempt to render the local authority impotent – the authority and all of the employees, just like what befell the government. I promise you that in the case of a strike, if all of government ministers don't work for an entire month – nothing will happen. A one- or two-week strike in local authorities will cause uproar. In the realm of Israeli law, the responsibility is all on us and the authority is all yours, in the hands of the government. I am the one who faces the citizens every day. What we need in Israel is to reform the entire local government according to the model of the regional councils. Why is their situation so good? They collect more property taxes and have fewer debts. The unique structure of the regional council, which does not involve politics or partisanship – the root of all evil, is what makes them so successful. Every time you strike a blow to a balance grant, you end up with the same expenses in recovery plans."

Bar-On: "The proposal to make some of the balance grants contingent upon taxation rates is praiseworthy. As for the claims that regional councils' budgets were cut – we feel that the average costs of services is higher, as a result of the large distances. Increasing efficiency as opposed to harming representation – if factually we all know that some of the authorities have failing management, why not take on the accepted model of separating between the level of policymaking and the level of executing the policy?"

Yael German, Mayor of Herzeliya: "I am of the opinion that the government must urgently set up a task force to deal with the problems in the Arab sector – and the Ultra-Orthodox one. These are problems that threaten the economy and democracy. We have democratic models of local authorities. We in the local authorities have everything it takes to be an extremely democratic organization because at the foundation we have the direct vote. But it is unacceptable that at the same time our authority is reduced, because direct votes equal recognition of authority. I believe that it is impossible to separate between the policy-making level, and the executive level. It is unacceptable that I am unable to fulfill the goals specified in my platform because of clerks' decisions. Israelis pay income tax, VAT, etc., etc. – and believe they receive free education in return, which is untrue. Their education is funded by their property taxes. It should be clear what the government provides." 

Prof. Avia Spivak: "The crisis can be traced back to the budget cut of 2003. That is what's happening in the universities, where the excuses are claims of corruption and streamlining. This crisis-oriented method is unclear to me – first create a crisis in a certain sector, and then make all kinds of demands. In Beer Sheva, for example, the management is not so professional, and there is no question that a mayor or head of a local authority is very important in providing jobs and increasing the quality of life. The idea that budget cuts are what will improve local governance is a mistake, because in the current situation good people will not want to enter the field."

Yossi Kutchik: "the document presented here is horrible. I think there should be a differentiation between clusters 1 – 5, and 6 – 10. Dealing with the lower cluster is in fact dealing with the Arab sector. There is horrible discrimination. What we are doing to ourselves and to the Israeli Arabs is intolerable."