Israeli Prime Minister Benjamin Netanyahu’s governing coalition narrowly beat a deadline that would have led to an early election, passing the 2026 state budget early Monday morning, a day before the March 31 deadline.

The budget passed after the coalition granted NIS 800 million ($255 million) in benefits to Haredi institutions, and promised Shas and United Torah Judaism that the government would pass a law that, in effect, would continue yeshiva students’ exemption from military service, even as Lt. Gen. Eyal Zamir, the IDF chief of staff, raised “10 red flags” about insufficient military manpower.

According to Israeli law, state budgets are meant to be passed by the end of the previous fiscal year, on December 31, but an extension is permitted to the end of March. If no budget is passed by the final deadline, the Knesset is automatically dissolved and an election is called for three months later.

This government had used that extension amid disputes over legislation reducing the penalties on Haredi yeshivas and young men who do not enlist in the IDF such that it would effectively continue their blanket exemption from military service. The matter remained unresolved, with Haredi parties threatening to vote against the budget, as the war with Iran began at the end of February.  

Two weeks into the war, Netanyahu and Israeli Finance Minister Bezalel Smotrich announced that the coalition would set aside legislation under dispute, including Haredi conscription, in order to pass the budget.

As part of the conditions for Haredi parties Shas and United Torah Judaism to drop their demand to pass the conscription exemption bill, the budget included an increase of over NIS 1 billion (approximately $319 million) for Haredi yeshivas and other institutions. The funding would offset much of the sanctions on Haredi individuals and institutions in recent years, after the High Court of Justice struck down their exemption from IDF service.

Israeli Attorney-General Gali Baharav-Miara had blocked most of the funds from being included in the draft of the budget that went to a vote, because it was meant to circumvent the law, but the coalition voted it in soon after midnight Sunday as an amendment to the budget bill. 

In addition, Knesset Foreign Affairs and Defense Committee chairman Boaz Bismuth, of Netanyahu’s Likud Party, said last week that the Haredi IDF exemption bill would be back on the Knesset agenda in two weeks, after Passover — meeting another demand by the Haredi parties that the exemption from the IDF be legislated as soon as possible after the budget.

Bismuth’s remarks about the return of the Haredi exemption bill came on the same day as a report on Israel’s Channel 13 that Zamir warned in a Security Cabinet meeting that the “IDF is going to collapse in on itself” if it does not increase its ranks. 

In addition to the likelihood of Haredim no longer facing penalties for failing to serve, a law reducing mandatory IDF service from 36 months to 30 months is set to go into effect in January 2027. Zamir asked the government earlier this year to revert to the previous length of mandatory service.

”I am raising 10 red flags,” Zamir reportedly said. “The IDF needs a [Haredi] conscription law, a reserve duty [extension] law and a law to extend mandatory service. Before long, the IDF will not be ready for its routine missions and the reserve system will not last.” 

The 2026 budget is the largest in Israel’s history, reaching NIS 850.6 billion ($271 billion), with an unprecedented NIS 143 billion ($45.8 billion) for the defense budget alone, amid the war with Iran and Hezbollah and continued operations in Gaza.

All other ministries were cut by 3% to fund the extra wartime spending.

The budget was passed in a final vote after over 13 hours of opposition filibustering, as well as repeated missile sirens stopping the proceedings, during which lawmakers voted from a fortified room, as opposed to the regular Knesset plenum.