Budget approved

Cayman Islands lawmakers approved a $700 million spending plan Wednesday for the current 2009/10 budget year, including costs for statutory authorities and government-owned companies.

The budget was supported by all members of the United Democratic Party government and Independent MLA Ezzard Miller of North Side.

All members of the opposition party, the People’s Progressive Movement, abstained from taking a vote. Members offered no explanation for the abstentions during the proceedings.

‘Those who abstain can’t get paid,’ Leader of Government Business McKeeva Bush said jokingly following the vote.

The spending plan has been described as a bare bones budget, but calls for a significant number of fee increases as well as some brand new fees on Cayman Islands businesses and residents this year.

The budget for Cayman’s 2009/10 fiscal year does not include any direct taxation, such as property, income or payroll taxes.

Fee increases range from charges on money remittance transfers, to work permit fee hikes, to a slew of operating charges on the financial services sector. The government expects to earn an additional CI$95 million in the current budget year from the new fees, and some $126 million over the course of a full fiscal year.

The country’s budget year actually began on 1 July, but government had to use a temporary appropriation to get through the first four months of the fiscal year following the May elections.

The combination of the new fees, plus some spending control measures in the civil service, is expected to bring the Islands back into compliance with legal principles of financial management, and will hopefully keep Cayman from going back to the United Kingdom to seek approval for further borrowing.

The UK did preliminarily agree to let Cayman borrow CI$279 million to help it get through the year, although CI$229 million of that amount required certain conditions be met. Mr. Jefferson said Friday the government intended to borrow $275 million in the current budget year, mainly to pay off previous loans and fund major public construction projects.

Leader of Government Business McKeeva Bush said he refused to agree to any direct taxation despite UK overtures to do so.

The country’s proposed budget contains projections of CI$562.2 million for core government revenues – a large increase from the badly underestimated CI$528.2 million projected in the 2008/09 budget year.

However, Mr. Jefferson pointed out that no new fees were proposed in last year’s budget.

Core government expenditures total CI$557.4 million in the newly proposed budget. That amount ended up being about $10 million less than what core government spent in the 2008/09 budget year.

Government identified various ways of curtailing expenditure including restrictions on hiring new staff, cutting back on overtime pay, reducing rental costs, eliminating non-essential travel and restricting personal use of government vehicles by civil servants.

Portfolio of the Civil Service Chief Officer Gloria McField-Nixon said that the government has lost 153 workers in the past year, mainly due to decisions to leave vacant positions open and non-renewal of expiring contracts. She said the size of the civil service had gone from 3,833 people in September 2008 to 3,680 last month.

Civil servants rejected a proposed two-per-cent temporary cut in pay, and government leaders had earlier promised not to actively seek to eliminate government jobs.

“The government had to combat the tendency of increasing operating expenses of the civil service and to curtail operating costs…without seriously jeopardising the quality and quantity of services to the public,” Financial Secretary Kenneth Jefferson said.