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Israel: Supreme Court Leading Decision on Constitutionality of Two-Year State Budget

(Apr. 12, 2011) On April 7, 2011, Israel's Supreme Court, sitting as a High Court of Justice in an extended bench of seven justices, unanimously rejected a petition to declare void the Basic Law: State Budget for the Years 2009 and 2010 (Special Provisions) (Temporary Application) (Amendment). The Amendment provides that the state budget for 2011 and 2012 will be a bi-yearly budget. It follows the earlier basic law on the budget, which had similarly provided for a bi-yearly state budget for 2009 and 2010, deviating from the requirement to approve the state budget on a yearly basis in accordance with the Basic Law: The State Economy.

According to Court President Dorit Beinish, basic laws in Israel are based on an historical compromise, reached by the Constituent Assembly on June 13, 1950, to prepare a constitution that would be composed of separate chapters that would be gradually adopted and considered as basic laws that will be included in a future single constitution. Beinish determined that in an ideal system that includes a strict procedure for amending the constitution, it would be doubtful whether a temporary amendment to a constitutional provision would be possible. In the current situation in Israel, however, there is no such procedure, and a temporary amendment of a basic law does not nullify or lower its constitutional, normative status. (H.C. 4908/10 Knesset Member Bar-On v. Israel's Knesset [in Hebrew], The State of Israel: The Judicial Authority website (last visited Apr. 8, 2011).)

Beinish further determined that the initial passage of the temporary two-year budget for 2009 and 2010 occurred because of the combination of unique circumstances. These included the election of a new government following the resignation of Ehud Olmert (the former Prime Minister) in early 2009 and the global economic crisis with its then-feared consequences for the Israeli economy. Having reviewed the Knesset hearings on the subject of a bi-yearly budget, Beinish concluded that the passage of the Amendment was based on the recommendation of top officials of the Ministry of the Treasury to extend the experimentation in a bi-yearly budget, following the earlier positive example of 2009/2010. The Ministry representatives' views, as expressed in those hearings, were that in the absence of a pilot experiment, they wished to refrain from a permanent amendment of the basic laws. A Ministry recommendation for a permanent bi-annual budget, they argued, could be adopted only after additional experimentation. (Id.)

Having held that the temporary Amendment was valid in view of the above circumstances, Beinish stated that the Knesset (Israel's parliament) should nevertheless generally refrain from using temporary provisions to amend constitutional provisions contained in basic laws. In the absence of a strict, mandatory procedure for constitutional amendments, such desistance, she held, is based on the normative status of basic laws. (Id.)

Beinish made an additional major determination on the issue of whether the adoption of the temporary Amendment violated the constitutional balance of power between the legislative branch and the executive branch. According to the petitioners, Knesset ratification of a budget law on a yearly basis is considered a basic rule in democratic countries and is essential for parliamentary review of governmental activities and priorities. The petitioners further argued that, by allowing a two- instead of a one- year budget, were designed to weaken the Knesset vis-à-vis the government by replacing with a two-year measure the Knesset's yearly powerful ability to fire the government if a budget is not adopted. (Id.)

In rejecting the petitioners' claim, Beinish held that although the Knesset review of governmental activities is a central component of the principle of separation of powers, requiring a bi-yearly instead of a yearly review does not amount to harm of the basic principles of the regime that would justify nullification of the basic law. Beinish noted that the principle of Israel as a Jewish and democratic state is such a basic principle that it cannot be changed. When the state constitution is completed, she stated, the question of inclusion of additional provisions that reflect basic principles of the Israeli state and society will be put to debate. Currently, she held, the harm caused to the Knesset by the switch to a bi-yearly budget does not amount to harm that would justify voidance of the basic law temporary Amendment. (Id.)

Agreeing with Beinish, Justice Elyakim Rubinstein further emphasized the importance of the completion of the Israeli constitution. He expressed his concern, in particular, for the potential harm that could be created should the public have the perception that basic laws, which are of higher normative status than ordinary laws, can be easily changed. (Id.; Basic Law: State Budget for the Years 2009 and 2010 (Special Provisions) (Temporary Application) (Amendment) [in Hebrew], SEFER HAHUKIM [Book of Laws, the official gazette], No. 2245, p. 550 (June 30, 2010), the Knesset website; Basic Law: The State Economy [in Hebrew], SEFER HAHUKIM, No. 777, 206 (July 31, 1975), the Knesset website.)