Needs and Impediments for Local Government Reform:
Centralization vs. Decentralization and Modernity vs.
Traditionalism in Israel
Department of Geography, The Hebrew University, Jerusalem 91905, Israel
Presented at the Regional Conference of the International Geographical Union,
Commission of Geography and Public Policy, Durban, South Africa, 4-7 August 2002
Israel’s local government is:
1. Typical in tensions between pressures of decentralization and those towards
centralization, tensions of modern versus traditional forms of local governance,
and of municipal fragmentation versus consolidation.
2. However, it is unique in its failure to implement any conscious reform for over 50
In many developing countries: a gap between formal procedures and actual practices
results from frequent formal reforms that cannot be matched by shifts in governance
culture and behavior.
In Israel the opposite situation occurs: practices have changed considerably, but the
legal-administrative basis failed to adjust.
1. To define Israel’s local government system in a comparative perspective, in order
to assess whether reform in Israel is indeed an urgent matter – whether the
perceived need for reform is based on realities or on myths?
2. To identify factors that influence the propensity for the implementation of local
government reforms - particularly factors that hamper the implementation of such
reforms, based on Israel’s experience.
Attributes and motives of local government reforms
Local government reforms deal with one or more of the following aspects:
1. Territorial reforms.
2. Decentralization or recentralization of tasks and political autonomy.
3. Reforms in local government finance.
4. Electoral reforms.
Where and when are reforms implemented?
1. A fundamental difference between Canada and the United States.
2. A remarkable gap between Britain and France. Germany is in-between.
3. The propensity for the implementation of broad territorial reforms is time-
4. Reforms have been frequent in developing countries, frequently under pressures
of donor organizations.
Factors influencing the propensity for the formulation and implementation of
local government reforms (based on the international experience)
1. Political-ideological environment. Dominance of viewpoints supporting the
extension of the welfare state versus neo-conservative ones.
2. Dominant values of the social elite. An emphasis on efficiency and effectiveness
versus an emphasis on local democracy.
3. Social homogeneity. Ethnic and religious homo geneity and narrow socioeconomic
gaps versus fragmented and polarized society.
4. Political-partisan environment. Power position of local political leaders and the
role of national parties in local politics.
5. National economic and political strength. Crisis could trigger reforms, some
encouraged or even imposed by international donor organizations.
6. Major political or economic transformations encourage reforms.
Definition of Israel’s Local Government System
1. The territorial dimension. Unlike image, local go vernment in Israel is not
extremely fragmented, but suffers from lack of sufficient mechanisms that
mitigate problems associated with fragmentation.
2. Functional and political decentralization. Israel is somewhat centralized in the
allocation of tasks, but a wide gap between centralized legal basis and more
(a) Local authorities have substantial informal autonomy, despite of the
centralized legislation` thus this authority comes without formal
responsibility. However, the other side of this coin is that noncompliance of
outdated formal rules to actual practices serves to preserve substantial
dependency on the central government. When the rules are not entirely
clear, local leaders depend on the good will of central government
politicians and bureaucrats.
(b) There has been a substantial rise of local initiative, land use planning
and education being major arenas for competition among local authorities.
However, expansion in the range of activities, unaccompanied by increase
in financial resources, leads to crisis that could encourage privatization and
transfer of functions to NGOs.
3. Local government finance. Relatively high central grants and high dependency on
property-based local taxes characterize the Israeli sys tem. A radical change
occurred in the mid- 1980s, but the large increase in self- generated revenues, the
abolition of transferred revenues and the reduction of equalization grants were not
a result of a conscious reform.
4. Elections and local democracy. A 1975 reform: direct election of mayors. Strong
mayors, weak council, relatively weak municipal bureaucracy, low level of citizen
participation and frequently ineffective control of government ministries.
5. Modernity versus traditionalism. Aspirations to adopt norms of good governance
confront pressures towards “traditional” forms of governance, embedded in
politics and society (over-embeddedness). Wide variations in management
practices between municipalities.
The paths for reform
Devising directions for l cal government reform should acknowledge that progress
towards more modern and professional forms of local governance does not
necessarily imply decentralization (Figure 1).
Reform in Israel could follow three main directions:
1. A centralized welfare state model, in which local authorities largely serve as an
arm for the delivery of public services.
2. Privatization and decentralization of tasks to NGOs, largely bypassing local
3. A decentralized model that emphasizes local autonomy.
The viable path of reform for Israel seems to be towards decentralization. A broad
implementation of American practices requires a system of checks and balances that
does not exist in Israel. Other relevant distinctions between Israel and the United
States: the greater value awarded to equality in Israel, the reality of a small and dense
Selected elements in the agenda for reform
Most are quite familiar from experiences of other countries:
1. Protecting local government from excessive central government intervention.
2. Strengthening mechanisms of municipal cooperation and establishment of single-
purpose special districts.
3. Reducing the number of local authorities, or at least strictly limiting the
establishment of new small municipalities.
4. Defining formal links between tasks performed by local authorities and the
allocation of financial resources.
5. Greater transparency of government transfers.
6. Limiting central government monitoring to a few fields of critical importance,
rather than requiring formal approvals for each small loan, development project,
7. Terminating the involvement of the government in local government bodies such
as religious councils and the first council of a new local authority.
8. Defining clear fiscal responsibilities of both local and central governments.
Functional decentralization in Israel entails not only the transfer of tasks from central
government to local government, but also a degree of further decentralization to the
private sector, NGOs and sub- municipal (neighborhood) units (Figure 2).
Political decentralization entails not only the transfer of powers from central
government to local government, but also further transfer of powers to the council, to
senior local bureaucratic level and to auditing systems. Decentralization cannot end
with the concentration of powers in the hands of mayors. Moreover, political
decentralization requires also greater community involvement in local government
affairs, to replace central government monitoring.
Such changes would require a new local government law, and perhaps even a local
government basic law that would define the basic principles of local government-
central government relations in Israel.
Why have attempts to reform local government in Israel failed?
*. One explanation puts part of the blame at the reform proposals themselves, which
ignore considerations of political feasibility, or make irrelevant analogies with
fashionable steps undertaken in other Western countries, following the common
wisdom of the period.
*. A second explanation emphasizes the high political price of reforms: the applause
of beneficiaries is weaker and more defuse than laud protests of losers.
*. Lack of political “actors” that have a real interest in reforming local government
has been a feature of Israel’s political scene.
*. Problematic implications of two major reforms: the reform in the public health
system and the direct election of the Prime Minister, have deterred proposals for
These explanations are relevant but they are not unique to Israel and do not form a
sufficient explanation for the exceptional lack of any substantial reform in Israel for
more than half a century.
Local government reorganization was not on the public agenda until the early 1970s,
because of the remarkable centralization that characterized the Israeli political system.
Weakness and fragmentation of local government served the central government by
assuring its practical control on functions performed by local authorities. However
this explanation has become le ss relevant in recent decades.
Major attributes of the political-social environment that explain the exceptional
inability to implement substantial local government reforms in Israel are thus as
1. The close links between local and national politic s in Israel have hampered
reforms. Reforms are easier to implement in countries where local politics are not
an arena in which national parties directly play. In multiparty coalition
government structure, reforms are particularly risky, because they can lead to
conflicts within the central government, and not only between the party in power
and its opposition.
2. Lack of ethno-religious homogeneity also hampers the implementation of
territorial reforms, particularly when those are interpreted as influencing i ter-
ethnic relations, such as Jewish-Arab relations, rather than only administrative
structures for the provision of services.
3. The growing gap between formal centralized rules and informal understandings
could paradoxically reduce pressures for formal control. The system does not
decay into severe crisis when major laws and rules become outdated, because it
adopts patterns of action termed as fuzzy control: partial and flexible
implementation of control and monitoring mechanisms that entail problems of
fairness and proper administration, but prevent the collapse of the system.
4. Political decentralization and social fragmentation since the 1970s have made
reforms even more difficult to implement. The central government acts as several,
often opposing, stakeholders. In the Knesset, voting discipline of coalition
members has diminished; thus, the government tends to refrain from legislation
5. The courts, particularly the High Court of Justice, have increasingly become the
arenas for societal conflicts. Growing judicial activism has been perceived as
limiting substantially the government’s freedom of action, perhaps contributing to
the process of decentralization. However, the ability of the courts to lead a process
of decentralization without formal reform is limited. Frequent court intervention
could even lead to growing conservatism and avoidance of decisions opposed by
various interest groups. Thus, the rapid turnover in the Israeli government, the
government’s lack of control over the Knesset and prolonged battles in the High
Court of Justice reduce even further the propensity of attempts for broad steps of
Is it possible to overcome the formidable barriers for reform?
One option is to promote reform externally, through non-parliamentary groups/NGOs,
preparing proposals for new legislation and lobbying in the political arena for their
passage, rather than waiting for initiative to come from the legislature or the
Reforms could perhaps be implemented with greater ease under conditions of severe
crisis. The Ministry of Finance is trying to proceed with some reforms in the 2003
budget, utilizing the agenda of budget cuts urgently needed due to the ongoing Israeli-
Palestinian crisis. Substantial policy shifts (in economic development policies, in
planning policies) became possible in Israel in the early 1990s, due to the drastic
“shock” of mass- immigration. Would the present political and economic crisis
similarly enable reforms that have not been otherwise politically feasible?
This research was supported by the Israel Science Foundation (grant no. 774/00-1).
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Table 1: Mean population size of local authorities in selected countries, 1998
Country Mean population Country Mean population
size of local size of local
France* 1610 Norway* 10186
Czech Republic 1652 Slovenia 10323
Slovakia 1878 Finland 11400
Switzerland* 2355 Poland* 15535
Hungary* 3211 Belgium* 17341
Austria* 3424 Denmark* 19276
Luxembourg 3610 Israel 22532
Latvia 4350 The Netherlands* 28662
Spain* 4862 Sweden* 30637
Israel 5039 Bulgaria 31515
Germany* 5088 Portugal 36207
Estonia 5709 Ireland* 46313
United States * 6984 Lithuania 66125
Italy* 7079 United Kingdom* 140372
Croatia* 8304 Ghana* 174200
Sources: Lallemand Flucher, 2000; US Census Bureau, 1999, and several country specific
1. The calculation of mean size refers to the bottom level of local government and assumes
that all of the country’s population resides in local authorities.
2. Municipalities (cities), local councils and local village committees.
3. Data of 1997. Data include counties and general-purpose governments.
4. Municipalities (cities), local councils and regional councils.
* - The country has top-tier local governments or regional/canton/state governments (the data
refers only to the lower-tier local authorities.
Table 2: Local government expenditures in selected countries as a proportion of total
government expenditures, 1998
Country % local government Country % local government
expenditures of total expenditures of total
government expenditures government expenditures
Denmark 55.8 Austria* 17.2
Belarus 41.1 Brazil* (1997) 16.9
Russia** 39.8 Luxembourg (1997) 15.4
Mongolia 39.7 Germany* 15.2
Finland 39.1 Spain* (1997) 14.8
Norway 38.6 Israel (1996) 14.5
Sweden 37.0 Bolivia* 13.7
Kazakhstan 35.8 Romania (1997) 12.5
Ireland (1997) 31.4 Croatia 12.2
Iceland 29.5 Belgium 11.7
Kyrgyzstan (1999) 29.2 Slovenia 11.4
Moldova 28.5 New Zealand 10.9
Hungary 26.2 Peru* 10.6
United Kingdom 26.1 Portugal 10.3
Netherlands** (1997) 26.1 Guatemala (1993) 10.3
Italy 26.1 South Africa* 9.9
United States* 26.1 Philippines (1992) 9.2
Latvia 25.7 Thailand 8.6
Azerbaijan 24.4 Chile 8.6
Poland 22.5 Nicaragua (1995) 8.6
Estonia 22.2 Slovakia 8.1
Lithuania 22.1 Australia* 6.1
Switzerland* 21.9 Mexico* (1997) 4.5
Czech Republic 20.8 Malaysia* (1997) 4.5
Bulgaria 20.3 Botswana (1994) 3.5
Albania 18.7 Kenya (1994) 3.5
France (1997) 18.6 Paraguay (1993) 2.6
Canada* (1997) 18.1
Source: International Monetary Fund, 2000
Total government expenditures = total government expenditures at all levels (national, regional, local)
minus transfers of each level to lower levels (in order not to count transfers twice).
* Countries that include a regional level of government (including federal countries).
** Regions/provinces were included in data as local governments.
Table 3: Proportion of grants from upper levels of government and proportion of property
taxes of total local government revenues in selected countries, 1998
Country % grants % property taxes Country % grants % property taxes
Kenya (1994) 0.0 21.9 Poland 34.1 11.4
Paraguay (1993) 0.0 31.3 France (1997) 34.2 16.8
Nicaragua (1995) 1.4 4.4 Romania (1997) 34.2 5.3
Mexico* (1997) 4.9 12.0 Germany* 34.6 6.0
Bolivia* 5.5 8.4 Luxembourg (1997) 36.3 0.0
Croatia 6.1 6.2 Canada* (1997) 37.2 38.6
Chile 6.5 35.6 United States* 37.3 28.3
Iceland 9.1 9.5 Norway 38.0 3.4
New Zealand 9.7 46.8 Bulgaria 38.3 7.7
Russia** 14.6 13.1 Mongolia 39.9 0.2
Switzerland* 15.7 7.9 Denmark 40.3 3.2
Slovakia 16.2 14.2 Moldova 40.7 9.1
Australia* 16.4 44.8 Azerbaijan 41.7 3.4
Austria* 17.6 0.0 Israel (1996) 42.7 30.6
South Africa* 18.7 38.2 Italy 49.7 n.a.
Malaysia* (1997) 19.9 n.a. Kyrgyzstan (1999) 50.1 0.0
Belarus 20.1 6.8 Hungary 50.2 3.0
Sweden 20.3 0.0 Peru* 51.3 n.a.
Slovenia 21.7 14.0 Belgium 53.0 0.0
Lithuania 21.8 6.6 Philippines (1992) 57.2 14.2
Finland 22.5 n.a. Brazil* (1997) 65.6 9.0
Czech Republic 23.8 2.6 Guatemala (1993) 66.9 1.1
Estonia 25.9 5.2 Netherlands** (1997) 68.2 4.2
Kazakhstan 26.6 14.6 United Kingdom 70.1 0.1
Latvia 27.0 12.4 Ireland (1997) 78.6 2.1
Thailand 32.3 8.3 Botswana (1994) 83.2 8.5
Portugal 33.0 11.5 Albania 96.0 0.0
Spain* (1997) 33.4 14.5
Source: International Monetary Fund, 2000.
* Countries that include a regional level of government (including federal countries).
** Regions/provinces were included in data as local governments.
n.a. – Data not available.
Figure 1: Paths for local government reform
Figure 2: Functional and political decentralization in Israel