Jerusalem is at once a world-class brand, a paradox of every type, and an obsession of about one-quarter of the people on the planet. It is also a city of almost 900,000 people that happens to be structurally insolvent.
With a 2016 operating budget of NIS 5.15 billion, Jerusalem received NIS 320 million from the national government to cover its operating deficit in 2015 and NIS 516m. in 2016. This is a 10% percent operating deficit. Such a deficit is a big budget problem; there is not enough money to pay the current bills and to take care of long-term needs and obligations, such as infrastructure spending, pension obligations and other legacy costs.
With about one-third of the city’s population at or below the national poverty level (compared to one-fifth nationally, and just over one-tenth in Tel Aviv) and the high concentration of land use in government and non-profit activities, total property tax exemptions more than double that of Tel Aviv and Haifa – in 2015, such exemptions totaled more than NIS 587m., or 23% percent of all taxable real estate in the city. Though Jerusalem businesses and residents who do pay property tax are burdened with rates at almost twice the amount per square meter than in other cities, total property tax collection per capita is still significantly lower than that of other major cities in the country (see chart). Per-capita municipal expenditures in Jerusalem are about half the per-capita expenditures in other major cities in Israel. Jerusalem is like an employee who has to work 16-hour shifts and get only half the salary.
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