Cabinet to decide budget cuts Tuesday

Top-ranking civil servants and
Cayman Islands’ Cabinet officials worked through the weekend on a series of
budget cutting proposals being made in a last ditch effort to stave off public sector
salary cuts.

According to a memo from Acting
Deputy Governor Franz Manderson that was circulated Thursday, proposed pay
reductions of between five and 15 per cent have been put off for this month.

“However, reductions to salaries
and wages remain under active and urgent consideration,” the memo read.

All central government department
managers, as well as statutory authorities and government-owned companies, were
asked to present non-salary budget reductions of at least 15 per cent earlier
in the month by Financial Secretary Kenneth Jefferson. Mr. Manderson’s memo –
which was released the following week – stressed the importance of making those
reductions as soon as possible.

“These reductions are utterly
essential in order to reduce the projected net deficit for the year to 30 June
(the end of government’s current fiscal year),” the memo read. “Any acute
negative impacts which you feel such a reduction may cause should be reported.”

“These projected impacts must not
simply be used as a basis of not offering up the reduction. Furthermore, any
agency which is able to achieve more than the required 15 per cent should do

In fact, the Caymanian Compass has
learned that some government departments had already been asked to cut deeper
than the 15 per cent figure upon presenting their proposed reductions to
Cabinet representatives.

According to Mr. Manderson’s memo,
civil service department heads and chief officers would be contacted Monday to
be informed which of their budget cutting proposals had been accepted. Those
reductions will then be considered by Cabinet on Tuesday.

“I appreciate that this is a tight
timetable, but I feel it is attainable as you have been working towards this
end for the past week,” Mr. Manderson wrote in the memo.

Cayman Islands Civil Service
Association President James Watler said he knew of some discussion about civil
servant salaries being cut by roughly three per cent – the amount they
increased in the last cost of living adjustment government provided.

However, Mr. Watler said, as far as
he was aware, any pay cut proposals remained at the discussion stage.

“It’s better than what they had proposed,” Mr. Watler said.
“Things are extremely fluid right now.”

He said civil servants could take
heart that government had apparently abandoned proposals made earlier by
Premier McKeeva Bush that would have required some public sector workers to
contribute 50 per cent of their health insurance premiums from their own pay.

“The concept of civil servants
contributing to health insurance costs….is not being pursued,” Mr. Manderson’s
memo stated.

Also, a proposed “100 per cent
pension holiday” – a suspension of statutorily required pension fund payments
made to each government worker – was deferred. Currently, the law requires government
to pay 12 per cent on top of an employees’ monthly salary toward a retirement

Mr. Manderson’s memo was released
while Premier Bush and Financial Secretary Jefferson were in the United Kingdom
discussing the contents of an independent revenue study with the Foreign and
Commonwealth Office.

Cayman is required to maintain six
principles of responsible financial management in its yearly budget proposals.
Right now, it is violation of three of those; including the total amount of
debt government is allowed to incur, and operating in a deficit position.

If the situation is not righted,
the UK
government could restrict Cayman’s ability to borrow money to meet its expenses.

The government will hold a press
conference Monday morning to address the outcome of its meetings in the UK.