What Happens When the State Budget Expires on December 31st?

YERUSHALAYIM
Finance Minister Moshe Kahlon (L.) seen with Director-General Manager of the Finance Ministry, Shai Babad. (Yonatan Sindel/Flash90)

If a government is not formed by December 31, Israel will be entering a “budget emergency” – because without a government in office, the current state budget, which expires at the end of the year, cannot be extended, the director-general of the Finance Ministry, Shai Babad, told Yediot Acharonot. “We can’t continue to allocate funds in a budget based on deficits, as we have now,” Babad said. “We are going to have to make adjustments.”

According to the law, money cannot be allocated by the ministry without the authorization of the government – and if there is no government, the authorization powers transfer to the State Attorney, Avichai Mandelblit. Mandelblit would sign off on a monthly allocation that will supply funds to ministries at the same level as in the current state budget, with no increases or decreases. However, Babad said, the fact that the Israeli population grew by 2% this year translates to an immediate 2% across-the-board cut in the state budget.

With that, funding for specific projects, as well as benefits that the ministry had signed off on and need to be renewed by legislation or special order of the finance minister, will expire. Two of the most important programs that will be suddenly halted include a significant cut in taxes and duties on a wide range of products that were instituted by order of Finance Minister Moshe Kahlon earlier this year, and an increase in allocations for daycare centers that was signed by Kahlon to stave off a budget crisis which would have seen the cost of the centers skyrocket.

The Yediot report said that Mandelblit was obligated to weigh carefully which programs would be funded, as funding could be challenged as being “election propaganda” if a candidate associates themselves with those programs in an election campaign. Babad said that he and his staff would meet with Mandelblit after the holidays to determine which programs might fall into that category.

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