AG approves redefining coalition funds as part of regular budget

Attorney General Gali Baharav-Miara has approved Minister of Finance Bezalel Smotrich redefinition of some of the coalition funds for the Ministry of Education in clauses of the regular budget.

Smotrich’s desire to rebrand the political budget being passed by the government, in this case, for Haredi educational institutions that do not teach core studies (math and English) has so far delayed tabling the revised 2024 state budget in the Knesset. The budget is due to be presented to the Knesset tomorrow with partial success for Smotrich and Knesset Finance Committee Moshe Gafni’s efforts to embed the funds in the budget.

Over the weekend the Attorney General delivered her legal opinion to the Ministry of Education. “There is no legal impediment to the approval of the proposed resolution,” she wrote. However, the details of the decision are still unclear and the Ministry of Finance refuses to state the total amount that will be incorporated into the budget. An official at the Ministry of Finance said that the coalition funds intended for the Ministry of Education are divided into dozens of different components. For some, legal approval was received and for others it was not.

The funds will not enter the basic budget

Either way, the coalition funds that will be transferred to the budget – will not enter the basic budget. This is a significant point because funds that enter the basic budget are “permanently” in the budget in subsequent years, while coalition funds must be agreed on in every new budget. A large share of the funds for Haredi yeshivas and educational institutions originate from political agreements between United Torah Judaism and Shas and the Prime Minister and the Minister of Finance. This year’s yeshiva budget is expected to be more than NIS 1 billion – an achievement for the Haredi parties.

If the change is only in the terminology of the budget items, it is not clear why the Minister of Finance delayed the progress of the approval process for more than a week. Smotrich has not refuted criticism voiced against him by the opposition that he is seeking to hide coalition funds within the budget in order to avoid public criticism, so he can claim a cut in sectoral funds, even though it is only an accounting cut.

In the original 2024 budget approved last year, coalition funds amounted to NIS 8 billion. Of this, the government has approved a cut of about NIS 2.5 billion. Of the NIS 5.5 billion remaining in the coalition funds, Smotrich asked to transfer as much as possible to the status of regular budget funds. Not only from the Ministry of Education, but from various government ministries, including ministries of a distinct coalition nature such as the Ministry of Heritage of Israel.

Budget being submitted two weeks after deadline

The legal advisors of some government ministries submitted professional opinions to the Ministry of Finance. Without them Smotrich would not have been able to convert coalition funds in the proposed budget that will be presented to the Knesset. Ministry of Finance legal advisor Asi Messing, took pains to clarify this in the opinion he attached to the proposed decision on the Ministry of Education’s budget.

In order to avoid the Minister of Finance asking to delay submitting the budget for a few more days until he receives the opinion, on Sunday deputy attorney general Meir Levin, reminded Smotrich that every day’s delay violates the Basic Law of the State Economy. By law, the budget was supposed to be have been submitted back on January 20, meaning that the submission will be more than two weeks late.

The problem is not only in the period of time that has passed since the budget was supposed to reach the Knesset, but also in the limited time that will be left for the Knesset to approve the budget. The Knesset is required to finally approve the budget – after three readings and preparatory work in the finance committee by February 19 at the latest. If not, the law stipulates an across the board cut of NIS 67 billion in the current state budget, which would paralyze the government’s activities.

Published by Globes, Israel business news – en.globes.co.il – on February 4, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.