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."
Sheetrit: "That's an untrue accusation!"
Minister Bar-On joins in with Minister Shitrit, and MK Haim Oron agrees with Kutchik.
Kutchik: "Over the past twenty years, since Rabin's attempt to make a difference, the rifts and gaps just stay the same. Each government says it's trying to make a difference, and the result is always the same – as are the rifts. There are 1.5 million citizens who live in horrible poverty. It's not about balancing budgets. At this point, we should conduct a poll surveying the needs of the lower deciles, and let’s agree that once every four years they climb one socioeconomic level. It can be done and it must be done."
Prof. Eran Razin: "There's no reason to strengthen the head of the authority; he is already strong. We have to think about what to do with the council – raising the votes threshold, allocation of resources to the council members, and at least in the large cities we must consider regional elections – especially because the large cities have very low turnout rates.
Prof. Ephraim Tzdaka: "Gaps don't necessarily mean discrimination. Relieving the local government of certain responsibilities has already been emphasized. This is a society in which incomes are unequal, and in this kind of society you can't demand equal levels of spending – if you earn more, you'll spend more on education, just like you'll spend more on a car. Take the US for example. Local authorities provide a decent level of services to all of the citizens."
Prof. Dani Rabinowitz: "The data show that is Israel has a regressive support system – meaning more for the rich and less for the poor – that is an amazing fact. The lower clusters in Israel are the main victims of certain wrongs, for example the use of national resources for control and supervision over minorities. The second process is the state's withdrawal from its commitments to its citizens – which is an expression of the third process – the taking root of simplistic liberal stances, close-minded liberalism. I'm referring to the use of budgets as a reward for those who make progress. The alternative is to see budgets as a tax that is collected from the most successful people for the least successful. The award in Israel is given for achievements, but also on the basis of identity or belonging. The Arabs and the Ultra-Orthodox are the best examples in Israel. This is an ethical disagreement. Postponing the discussion does not mean a decision isn't made – it's made every single day. The scales of alienation and the projection of this alienation on identity and consciousness issues is the biggest price we pay. This is a huge mistake, of epic proportions. I will conclude with a reservation – I believe an essential change in the relations surveyed by this report is necessary, but not everything."
Ahmed Dabah, Mayor of Sajur: "After 2003, they said the problem was the budget cuts, and before that, the problem was the mismanagement of the authorities. Until 2003, the authorities were not supervised by the Ministry of Interior, and that is what led to the problems we are talking about today, such as debt, tax collection, and supervisory accountant. Since 2004, the ministers of interior have been rotating consecutively, and all through that time Sajur's creditor agreement was not prepared. And now, over 50% of the balance grant has been allocated to cover debts. Another problem is that people have not paid their municipal tax and water bills for 25 years – and now we have to deal with them. And those who don't cover previous debts aren't given discounts for future payments. Previous management caused the debt and created problems in collection and property taxes. I feel like I don't live in a democratic country, and I'm sent a fourth supervisory accountant, whose aim it is to deteriorate the municipality and the mayors work. I believe it's better to fire the mayor than to invite a supervisory accountant. You can't combine the two; you have to fall into line."
Tarek Ouad: "One of the problems in the Arab localities is the internal management. The elites from my village moved to Acre and Carmiel, and achieved a better lifestyle. I agree the votes threshold should be raised, but as long as there is the right kind of rotation. There is much pessimism amongst the Arab sector's local governments."
MK Haim Oron: "The balance grants should be increased. When the expenditure on education in the periphery – among Jews and Arabs – is equal and the level is not, people move from Arad to Omer, and from Kfar Yassif to Acre. Can we go to the Minister of Finance and say – "invest more here and less here", for 10 – 15 years in non-Jewish sectors?"
Dr. Ramzi Halabi: "I support the merging of local authorities, but as part of an initiative of the ministries of interior and finance, and not as a decision made by the authorities. Usually people don't want to unite with their neighbors. A specific example is the Carmel city. We agreed willfully to merge, because we were promised a wonderful city, a garden of roses. Not because we wanted to, but because the balance grant was cut 40% retroactively, in an election year. I had the feeling the government was belittling the local authority and expected us to come up with sources out of thin air in an election year. If you want to merge municipalities, you have to give the residents the feeling that it's in their best interest. I support extremely tight supervision of the authorities by the Ministry of Interior. I am for control mechanisms that are built-in to the process and not postmortem criticism. To head an authority which isn't Jewish in Israel is an almost impossible task because, on the one hand, you have the resident comparing you to the Jews, and on the other hand, you have to be committed to proper management."
Prof. Avi Ben-Bassat: "You can support mergers, but not as a way to save money – we checked and concluded that the size of the authority has nothing to do with debt. There is no doubt that there are management issues – not administrative, but leadership issues. Because when you don't collect from someone it's because you're afraid to, or you don't want to. If we look at per capita expenditure for education – it rises steadily up to three times as much in high clusters as opposed to low ones. Regarding the halting of services – the State of Israel decided on the balance grant, which is meant to make up for the gap between normative per capita income and expenditure. When it was substantially cut in 2003, the authorities faced a dilemma: Do you cut expenditure for education despite the huge gaps, or do you go into debt?"
Sheetrit: "Balance grants – we have appointed a new committee headed by Yaakov Shenan. In the upcoming agreements law we have inserted a clause that will declare that all government institutions pay their property taxes to the Ministry of Interior, and the Ministry will distribute it as part of the balance grant because there is no reason the money should reach richer cities. I hope that by the end of the year we receive the work being done by the Barzili committee. Israel is the only country in the world that collects proerty tax according to square meter. It doesn't make sense. One of our ideas is to find a unified way to measure apartment space. The second phase is to have the property valued every ten years, and pay taxes accordingly. We strive to build shared industrial areas, for Jews and Arabs. In existing areas, such as Tefen, we want to investigate the possibility of dividing property taxes among all of the local authorities in the area. We've agreed with the IDF that taxation for the training city will go to the Ministry of Interior. As for the merging of authorities – I disagree with the findings of the research. I think they are incorrect. There is no doubt in my mind that size is a deciding factor – we've checked the Azor and Holon. In Azor, the expenditure is four times as much as in Holon, and the level of services in Holon is higher. There is no sense in the city of Givataim – nor reason each city should have a stadium and an arena. In Denmark 275 local authorities were merged into 100. As for the claim that the state discriminates against Arabs – there is no such thing. I fully support changing the distribution of national income, but we must remember that the problem with Arab localities is mainly a consequence of mismanagement."
Bar-On: "Not all local Authorities are managed in the same way. The issue of a wide perception – the crisis in the local authorities is not only the Ministry of Interior's problem. We must look in order to see how deep the crisis is, beyond the issue of balance grants. Almost all of the government ministries are relevant. If my opinion were heard – we must return to the constitutional question, a basic law of local governance to follow a new municipality law. I want to warn that the status of law enforcement – not only collection, but also planning and construction – is very low in local authorities. I believe in a differential decentralization of authority – those who abide by the law can receive some of the central government's authority. These are not just words, this is a worldview."