More bad news hit the Cayman Islands government Monday as both elected government members and the financial secretary anticipated an operating deficit continuing in the new budget year that begins today.
Education Minister Rolston Anglin warned the public not to expect miracles.
‘There will be no overnight quick fix,’ Mr. Anglin said. ‘We will have a budget deficit again this year.’
A CI$573.6 million spending and borrowing proposal to get the Cayman Islands government through the next four months was approved Monday afternoon in Legislative Assembly.
All present lawmakers voted to support the plan, with the exception of opposition MLA Alden McLaughlin, who abstained from the vote.
Financial Secretary Ken Jefferson said the four-month spending plan assumes revenues of some $134.2 million and expenses roughly $172.5 million, leaving a projected $38 million operating deficit in the first four months of the fiscal year.
With additional expenses for financing and covering the losses of public authorities, Mr. Jefferson said the deficit could reach into the realm of some $57 million dollars.
The amount is separate from the $74 million budget deficit projected for the fiscal year that ended Tuesday.
However, Mr. Jefferson cautioned that the temporary spending proposal does not necessarily represent the exact amount government intends to pay out. He said civil service managers were being asked to be frugal wherever possible.
Revenue projections were based on what government earned during the first four months of the 2008/09 fiscal year.
The Cayman Islands budget year runs from 1 July to 30 June.
‘It could well be that the expenditures could be less,’ Mr. Jefferson said. ‘And obviously, operating revenues might not be exactly the same.’
The government plans to use some of its available cash balances to cover the projected gap. The rest will have to come from the $128 million officials plan to borrow.
Mr. Jefferson said an analysis done by the Portfolio of Finance and Economics indicated that between $26 million and $27 million would have to be borrowed to pay salaries and other recurring expenses during the first four months of the budget year.
The Financial Secretary has been mum on details of how that deficit grew from CI$29 million in March to $74 million in mid-June, but said he intended to release a statement about the matter later in the week.
Mr. McLaughlin said it amounted to a ‘dereliction of duty’ by Mr. Jefferson not to address those figures in Legislative Assembly.
Mr. Jefferson fired back on Monday, stating that Mr. McLaughlin was playing politics with the budget and that his comments were ‘full of theatrics.’
‘A former minister in the PPM (People’s Progressive Movement) administration, when I questioned the magnitude of expenditure, I was told that the function of ministries in their Cabinet was to incur expenditure and the role of the financial secretary was to find the money,’ Mr. Jefferson said.
‘Perhaps the answer (on the difference between the $29 million and $74 million deficit) is just as simple as that outlook.’
Mr. McLaughlin said that Mr. Jefferson had still not explained what additional spending by government had amounted to the increase in the deficit.
‘He continues to dodge responsibility because he has either been incompetent or is playing politics,’ Mr. McLaughlin said Monday.
Mr. Jefferson denied that he was dodging responsibility and said that he had been out of the country on government business between 13 June and 25 June.
The financial secretary did respond to questions from the Caymanian Compass on 13 June before leaving on his trip. However, he said he was unable to reply substantively to government queries because he was focused on the process of signing tax information exchange agreements between Cayman and several foreign countries.
‘A situation that could have been avoided if they had done anything about it in the last four years,’ Mr. Jefferson said, referring to the former People’s Progressive Movement government.
This comment provoked some boisterous, off-microphone statements on the floor of the Legislative Assembly.
‘You want something to print? Print that!’ Leader of Government Business McKeeva Bush shouted up to the press gallery.
Mr. Jefferson also pointed out that it took the opposition 12 days to respond to a 12 June statement by Mr. Bush, which detailed the financial state of the country. He said it was unreasonable for the opposition members to expect a response from him immediately after he returned from his overseas trip.
The financial secretary was also warned by Speaker of the House Mary Lawrence about his language when he made a comment that appeared to accuse the opposition People’s Progressive Movement party of ‘treason.’
‘For far too long the financial secretary has been seen as a scapegoat because they (referring to elected politicians) are comfortable in their belief that there is not going to be a reply,’ Mr. Jefferson said. ‘That will change.’
Mr. McLaughlin said Monday that Mr. Jefferson was trying to avoid the real issue by making incendiary comments about the former government.
‘I know of no instance during our administration when the (financial secretary) was made a scapegoat,’ Mr. McLaughlin said. ‘He refuses to accept that we acted on his advice even when the evidence is overwhelming.
‘He must continue to be called upon to explain how he got it so wrong.’