Unequal Distribution of Balance Grants to Jewish and Arab Municipalities.

Petition filed to the Supreme Court in 7/01 on behalf of the National Committee of Arab Mayors against the Ministry of Interior, the Ministry of Finance and the Prime Minister, seeking equal, objective criteria to be used by the government in distributing budget balancing grants to municipalities. The purpose of these 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 residents of towns and villages. At the time of the filing of the petition, the budget deficits of Arab municipalities accounted for 45% of the total deficits of all municipalities in Israel. A complex method of calculating the distribution of these grants, which differs for Arab and Jewish towns, leads to discrimination in budget balancing grant allocation. In its initial response to the petition, the state argued that, based on its calculations, there was no discrimination in the distribution method; on the contrary, there is a policy of affirmative action that awards Arab municipalities 21.5% of the budget grants, which is greater than the percentage of the population of Arab citizens of Israel. Adalah rejected this claim and argued that in order to ensure a minimum of basic services for their residents, funding allotments for the Arab municipalities should be among the highest in the country, since these towns consistently rank lowest on all socio-economic indices. The percentage-of-the-population criterion is not a relevant consideration in this instance; rather, distributions should be based on economic need. Additional arguments were submitted and hearings held in 2002, and the Court issued an order nisi in 6/02 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 1/04, the state submitted arguments to the Court detailing a new formula for calculating the allocation of balance grants, claiming its proposed criteria are applicable on a fair and equal basis to all towns and villages. Adalah responded in 3/04 that the new formula included elements which inherently benefit local councils and municipalities of Jewish towns only, and that its effect is therefore to deepen the discrimination within the system of allocating balance grants. The new criteria rely, for instance, on the "National Priority Areas" list, which, Adalah has claimed before the Supreme Court in a petition pending since 1998, is itself not based on clear objective criteria or legislation (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). The revised criteria also award towns which absorb new Jewish immigrants with additional balance grants; Arab towns and villages are completely excluded, as well 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). Thus, while the new criteria in the proposed formula are now clear, they are not objective, or necessarily based on socio-economic need, and increase the existing socio-economic gaps between the Arab and Jewish local councils and municipalities, 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. At a hearing held in 11/04, Adalah presented data to the Court illustrating the wide gap that exists between the allocation of budget balancing grants to Arab local councils and municipalities as compared to that which the government provides to Jewish towns. For example, by comparing local councils and municipalities of the same socio-economic level and population size in 2002, it is evident that the local councils and municipalities of Jewish towns in southern Israel received 35% more per citizen than Arab local councils and municipalities. In 2003, local councils and municipalities of Jewish towns received 59% more per citizen than their Arab counterparts. At the hearing, the Court decided that, due to the importance of the issues raised, it would expand the panel to seven justices for further hearings. In 2/05, Adalah submitted closing arguments to the Court. In 9/06, the Court ordered the state to submit to it an update regarding articles of the state’s budget for 2007 relating to budget balancing grants. The state did not provide details to the court, however, and in 12/06, Adalah requested an additional hearing on the case.

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