By: Barak Cohen
In the United States, the first Monday of February marks an important milestone in the country’s fiscal year. Annually, on this date, the President presents his proposed budget for the coming year to Congress for approval. A draft passes back and forth between congress and the President’s office, receives intensive scrutiny, and a thoroughly revised budget is fashioned before the beginning of the new fiscal year in October.
In Israel the budgeting process works quite differently. In a position paper presented at the Israel Democracy Institute’s Caesarea Economic Forum in 2005, The Balance of Power in the Budgeting Process, Prof. Avi Ben-Bassat and Dr. Momi Dahan evaluated Israel’s problematic national budgeting process in detail. Since the paper was published in 2006, a number of the paper’s recommendations have been implemented.
The progress of these policy changes was the topic of a high-level Roundtable Forum convened by the Israel Democracy Institute (IDI) on January 29, 2008. Attendees included the Director of the Prime Minister's Office, Raanan Dinur, the Director of the National Economics Council, Prof. Manuel Trajtenberg, the Deputy Director of the Finance Ministry, Sharon Gamsho, and the head of the research department for the Bank of Israel, Dr. Karnit Flug.
Among the suggestions made in the 2006 paper was the addition of an economic advisor to the government, to be included in the Prime Minister’s Office. This position was created in order to supervise the research and planning of the state’s economic priorities. With a Government Resolution in September 2006, this recommendation was instituted and Prof. Trajtenberg has filled the position, Director of the National Economics Council, since that time.
Numerous other proposed Israel reforms to the budgeting process have been put into action since 2006, including the recommendation that the ministries themselves, those receiving the funds and aware of the public priorities, be thoroughly engaged in the planning phase of the budget. Previously, the Prime Minister and Finance Minister created the strategy and outlined their visions for the division of resources independent of consultation with the relevant ministries.
The dialogue at IDI focused on other major concerns outlined in Prof. Ben-Bassat's and Dr. Dahan’s paper. The “unusually centralized” nature of the budgeting process was brought up for further debate. The rushed way in which the Knesset is forced to review and approve of this highly detailed document (often presented in July/August for approval by September) arose as a problem in need of a creative solution. Impassioned discussion surrounded the topic of transparency in the way ministerial budgets are allocated and divided. By the forum’s end, preliminary steps towards remedying these and numerous other issues left participants pleased with the frank, productive conversation and in agreement that there is plenty of work left to be done.