On 21 September 2006, the Supreme Court of Israel ordered the Minister of the Interior (MOI), the Minister of Finance and the Prime Minister to submit to it an update regarding articles of the state’s budget for 2007 relating to budget balancing grants to municipalities and local councils. The order was issued during a hearing on a petition filed by Adalah in July 2001 on behalf of the National Committee of Arab Mayors and the Municipality of Nazareth, requesting the determination of equal, clear, transparent and unified criteria for the allocation of such grants to local authorities. The Court decided that it will continue its deliberations on the case, pending for five years, after receiving the update from the state. The General Director of Adalah, Attorney Hassan Jabareen, represents the petitioners.

The panel of Justices hearing the case was composed of the new Supreme Court Chief Justice Dorit Beinisch and Justices Edna Arbel and David Cheshin. The hearing was attended by the Chairman of the High Follow-up Committee for Arab Citizens of Israel and the Head of the National Committee of Arab Mayors, Mr. Shawqi Khatib, the Mayor of Nazareth, Mr. Ramez Jeraisy, and other Arab mayors and public figures. Mr. Khatib and Mr. Jeraisy told the Court during the hearing that the government did not implement the agreement it made with them over the establishment of the principle of equality in the distribution of budget balancing grants.

The purpose of “budget balancing grants” is to reduce budget deficits created when the expenditure of municipalities and local councils for essential services exceeds their income. The grant is allocated in order to secure a minimal and reasonable level of service for the communities under their jurisdiction. As Attorney Jabareen argued, the government’s policy for distributing budget balancing grants discriminates against Arab municipalities and local councils and is not based on equitable criteria.

In June 2002, the Supreme Court issued an order nisi (order to show cause) asking the respondents to explain why the state should not apply clear, equal and unified criteria for the allocation of budget balancing grants to all local councils and municipalities in Israel.

In June 2003, the Attorney General (AG) announced that the MOI was to prepare new criteria to apply to all local authorities, which would guarantee the principle of equality and conform to the goals of budget balancing grants by October 2003. Therefore, the Court decided to postpone delivering a decision final on the petition.

In January 2004, the AG submitted arguments to the Court detailing a new equation by which the allocation of budget balancing grants would be calculated. This equation included elements which inherently benefit local councils and municipalities of Jewish towns only, thereby heightening the discrimination between Arab and Jewish towns. For example, the new equation provides increased grants to municipalities and local councils for the absorption of Jewish immigrants to Israel (olim), for towns designated as ‘National Priority Areas’ (found to constitute illegal discrimination by the Supreme Court in February 2006, see H.C. 2773/98 and H.C. 11163/03, The High Follow-up Committee for the Arab Citizens in Israel, et. al. v. the Prime Minister of Israel [accepting Adalah’s arguments]), and for towns classified as ‘front line’ communities (Jewish towns in the north of Israel and Jewish settlements in the 1967 Occupied Palestinian Territories have been classified this way).

In a response submitted in March 2004, Adalah argued that most of the elements in the equation set forth by the AG result in discrimination on the basis of national belonging, since they exclude the vast majority of Arab local councils and municipalities. Adalah also argued that this new equation increases the existing socio-economic gaps between Arab towns and their Jewish counterparts, thus contradicting the very purpose for which the grant was intended. Adalah concluded that the new equation is even more discriminatory than that originally challenged in the petition.

H.C. 6223/01, National Committee of Arab Mayors v. The Ministry of Interior, et. al. (case pending)