Fiscal Distress in Local Authorities in Israel: the Convened Committee as a Method and a Solution

This study addresses fiscal distress in local authorities in Israel and around the world, and provides an in-depth analysis of the city of Bnei Brak from 1994 to 2003. When the city of Bnei Brak grappled unsuccessfully with fiscal distress, the Ministry of the Interior appointed a Convened Committee (CC; Va'adah Kruah) to handle the crisis. This study explores the methods and solution used by the government to extricate the authority from bankruptcy, while examining the sources and repercussions of this decision. The findings show that the CC solution was borne of necessity, due to the gravity of the financial crisis and the fact that the government had no other way of bailing out the city. However, the situation in Bnei Brak did not improve even after the CC was appointed, which challenges the very efficacy of the solution. This forms the basis for a discussion of the complexities of resolving the fiscal distress of localities in Israel.