Government approves biannual budget

Treasury calls move "a historic precedent;" cabinet also votes to extend deadline to pass 2009 budget.

Steinitz Ariav 248.88 (photo credit: Ariel Jerozolimski )
Steinitz Ariav 248.88
(photo credit: Ariel Jerozolimski )
The cabinet on Sunday unanimously approved Finance Minister Yuval Steinitz's proposal for a biannual budget for the 2009 and 2010 fiscal years. The proposal was backed by Prime Minister Binyamin Netanyahu and will be brought for Knesset approval on Monday. If passed, the biannual budget would be a historic precedent in Israel, where the budget was always passed on an annual basis. The prime minister said, "This is a budget for a year-and-a-half, so that we can avoid taking this path of sorrows again in only a few months. Nevertheless, we reserve the right to be flexible according to the developments of the financial crisis." Steinitz said the decision correctly expressed the government's position on the global financial downturn. Meretz chairman Haim Oron demanded legal clarification on the legitimacy of submitting a biannual budget. Oron also wanted to know whether the temporary Knesset Finance Committee was allowed to discuss the matter in lieu of the Knesset Law Committee. He said that in his view, the Finance Committee had no authority to discuss an issue as significant as changing the budget's frequency. The cabinet also approved Steinitz's proposal to extend the deadline to pass the 2009 state budget. By law, a new government whose term begins before a state budget is passed falls automatically if it does not pass the budget within 45 days of its formation. That would give Netanyahu and his novice finance minister a deadline of May 14. The cabinet voted to change the law to give the government 106 days. The change was expected to be approved by the Knesset, as coalition factions agreed with Likud that they would not vote against it. Several Labor MKs are expected to vote against extending the budget's timeframe, however. Last week, the Treasury began preparing to submit a biannual budget instead of the 2009 budget that was not yet approved in the Knesset plenum and was returned for significant changes. Treasury officials in the began to coordinate government ministries' working plans within the framework of a biannual budget and instructed ministries to prepare for a five-percent cut in various expenses, which would amount to some NIS 10 billion. The 5% cut would come instead of a 1.7% addition - approximately NIS 3.4 billion - in the proposed 2009 budget. In absence of an approved budget for 2009, ministries have been working on monthly budgets since the beginning of the year, calculated based on their expenses in 2008. Top Treasury officials said passing a biannual budget under the new circumstances was "a historic precedent." Finance Ministry Director-General Yarom Ariav and budget director Ram Belnikov promised Steinitz that they would succeed in drafting a new budget within the given timeframe already during discussions held immediately after his swearing-in. At his request, Ariav and Belnikov repeated their pledge to Netanyahu over the weekend.