Knesset set to hold final 2 votes on passing 2026 state budget |
The Knesset is set to vote on the 2026 state budget Sunday in second and third readings, with coalition lawmakers expected to secure its passage.
While debate began in the Knesset plenum on Sunday morning, the actual vote may not be held until early Monday, as opposition lawmakers continue to filibuster and delay the vote.
The coalition has until Tuesday to pass the budget to meet the legally mandated March 31 deadline — the same day the Knesset begins its spring recess, with activity not set to resume until May 10.
Under the law, if the government fails to pass the budget by the end of March the Knesset will automatically dissolve, triggering early elections three months later. Elections are currently scheduled for late October.
The budget authorizes government spending of roughly NIS 850.6 billion ($271 billion) for the 2026 fiscal year.
By far the largest allocation in the budget is directed to defense. That part was already approved last week by a joint panel of the Foreign Affairs and Defense Committee and the Finance Committee (due to the sensitive nature of defense spending, the defense budget is not voted on by the full Knesset plenum).
The defense budget includes more than NIS 30 billion ($9.5 billion) in additional wartime funding, bringing the Defense Ministry’s total allocation to NIS 143 billion ($45.8 billion), as well as NIS 22 billion ($7 billion) in income-dependent expenditure — conditioned upon mainly US grants — as well as NIS 82.2 billion ($26.3 billion) for long-term spending commitments to be paid in future years.
Other major spending items in the general budget include nearly NIS 97 billion ($30.9 billion) for education, plus about NIS 14.9 billion for higher education ($4.7 billion); some NIS 64 billion ($20.3 billion) for the National Insurance Institute; roughly NIS 63 billion ($20 billion) for health; and NIS 30.4 billion ($9.6 billion) for national security.
The education budget includes about NIS 2.2 billion ($714.8 million) in discretionary coalition funds for the ultra-Orthodox community, approved as part of a broader dispersal of NIS 5 billion ($1.6 billion) in coalition funds by Prime Minister Benjamin Netanyahu earlier this month, including NIS 400 million ($129.5 million) for the Settlements and National Missions Ministry.
These allocations include NIS 1.56 billion ($497 million) for Torah institutions such as yeshivas and kollels (yeshivas for married men), NIS 75 million ($24.3 million) for “recognized but unofficial schools,” which commit to teaching 75 percent of the core curriculum of state schools and receive 75 percent of the funding of state schools, and NIS 32 million ($10.3 million) for so-called exempt schools, which receive about 55 percent of the funding allocated to state schools, provided they teach 55 percent of the core curriculum — a requirement that is rarely enforced.
Opposition lawmakers sharply criticized the coalition funds transferred to Haredi institutions, West Bank settlements, and other party priorities, particularly as other ministries were subjected to a 3% budget cut to finance increased defense spending amid the ongoing war with Iran.
Analysts have suggested that the approval of coalition funds for the ultra-Orthodox was meant to compensate for nearly NIS 1 billion intended for Haredi schools recently frozen by the High Court of Justice over their failure to teach core curriculum subjects as required by law, and to help secure the two ultra-Orthodox parties’ backing for the budget after the coalition froze the contentious draft exemption bill earlier this month.
While the ultra-Orthodox United Torah Judaism and Shas parties are expected to back the budget, Hebrew media reported that they were conditioning their backing on the draft exemption bill being reintroduced immediately after the budget is approved.
Ultra-Orthodox parties have demanded a law to keep their constituencies out of the military after the High Court in June 2024 ruled that there was no legal basis for Haredi yeshiva students’ decades-long blanket exemption from the draft.
In addition to voting on the first reading of the 2026 budget, lawmakers will also vote on the final readings of the 2026 Arrangements Law, a key part of the annual budgetary legislative package that determines how funds will be disbursed.
The bill has been substantially scaled back since it passed its first reading in January, and again in February when the Knesset voted to split the legislation in two, leaving some of the more controversial reforms out of the part that needs to be approved in order to pass the 2026 state budget — Finance Minister Bezalel Smotrich’s dairy reform, which sparked significant opposition from farmers, and a proposed tax on tobacco products and 1.5% property tax on vacant land.
The Knesset will also vote on the final readings of the Deficit Reduction and Budgetary Expenditure Limitation Bill, which sets the deficit ceiling for 2026 at 4.9% of GDP — up from the 3.9% in the first reading of the budget passed in January.
The Bank of Israel had already warned that even a 3.9% deficit is too high, arguing that it would not allow for a meaningful reduction in the national debt burden.
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