Emergency meeting held Wednesday
Cayman Islands government chief officers convened an emergency meeting Wednesday
following a revelation by the country’s financial secretary that no one was meeting
budget reduction goals for the upcoming financial year.
According to a memo issued 30 March
by Deputy Governor Donovan Ebanks, the civil service was required to cut its personnel
budget by some $19 million or about eight per cent in the new fiscal year –
which begins 1 July. A deadline of 9 April, last Friday, was set as the revised
budget submission deadline.
Financial Secretary Ken Jefferson sent
an e-mail to chief officers and elected lawmakers Tuesday that indicated compliance
with that budget-cutting directive was exactly zero.
“As of noon [Tuesday], two-thirds
of agencies had not made their revised budget submission to [the Budget
Management Unit] and, of the one-third that made a revised budget submission,
none had met all the percentage reduction targets sought,” Mr. Jefferson wrote.
Cabinet ministers called in chief
officers and their financial advisers for a meeting Wednesday to discuss the
apparent failure to meet budget reduction targets.
Specific budget reductions that
could include job cuts, payments for certain health care costs and even
temporary salary reductions may be needed in the upcoming year’s spending plan.
Mr. Ebanks had said that civil servants
would not be expected to take a pay cut in the current government financial
year, which runs through 30 June.
“These are extremely difficult
times,” Mr. Ebanks wrote in the 30 March administrative circular. “We must
continue to strive for effective and sustainable ways to reduce our costs,
bringing them in line with the prescribed targets.”
Mr. Ebanks said government
budget-cutting efforts that started in early March yielded about $49 million in
savings; $20 million in savings from operational costs and $29 million savings
in capital (construction) related costs. Those savings were projected to occur
between early March and 30 June.
However, neither Mr. Ebanks nor
Governor Duncan Taylor has provided specific details of where the $20 million
in savings from government operational costs was coming from. A majority of the
$29 million in capital costs was anticipated to come from the postponement of
certain works on two new public high schools.
“Unfortunately, due to the poor
performance in revenue, these may still not be sufficient to prevent cash flow
issues in June 2010,” Mr. Ebanks wrote in the 30 March memo.
In March, Cabinet members agreed to
set specific budget targets for each major area of government expenditure in
the coming budget year.
Those targets were set at $219
million for personnel costs – an eight per cent drop over the current year’s
projected budget ($238 million) for central government employees. A corresponding
eight per cent reduction has been mandated for statutory authorities and government-owned
“Cabinet has not stated how these
savings should be achieved, but rather has challenged ministries, portfolios
and [statutory authorities] to identify and implement solutions in preparation
for the 2010/11 budget,” the 30 March circular stated.
Cost-reducing measures are being
*Operational efficiencies aimed at
further reducing staffing levels
*Revised human resources policies
to temporarily reduce the cost of allowances
*Appropriate cost sharing for
existing benefits, particularly those related to health care
*Temporary salary reductions unless
adequate savings can be achieved otherwise
The 30 March circular expressly
stated that government had no intention to change current pension contribution
arrangements. Mr. Ebanks stated that any changes to the current healthcare coverage
policies would be thoroughly reviewed prior to implementation.
“As proposals to achieve reduction
in areas such as healthcare are developed, there will be consultation with key
stakeholders,” Mr. Ebanks’ circular read.