Discontent, confusion as Cayman budget passes

Opposition votes ‘no’, Miller abstains

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Premier McKeeva Bush got his $510
million budget passed in record time on Thursday after just two days of review
in the Legislative Assembly’s Finance Committee.

But the speedy passage of the
spending plan did not come without controversy. Four elected legislators voted
against the government’s budget during the heated and often disorganised
Legislative Assembly session.

The budget was approved by a vote
of 8 to 4, split along party lines, with independent MLA Ezzard Miller
abstaining.

Education Minister Rolston Anglin
and George Town MLA Alden McLaughlin were absent. Mr. Anglin was at a
graduation ceremony and Mr. McLaughlin was recovering from surgery in a Florida
hospital.

The new budget, which includes a
3.2 per cent pay cut for government workers and $155 million in additional
public sector borrowing, also calls for a 25 cent increase in import duties on
gas and diesel fuel.

The increase would raise gas import
duty from 50 cents per gallon to 75 cents per gallon. It would increase diesel
import duty from 60 cents per gallon to 85 cents per gallon.

It was this item that led
opposition party lawmakers Kurt Tibbetts, Arden McLean, Anthony Eden and Moses
Kirkconnell to vote ‘No’ on the entire spending plan.

Mr. Tibbetts had previously stated
that “God himself” would have to instruct him to vote for the proposed budget
if it contained the fuel increase.

Mr. Miller – who abstained from
voting on the budget – also said he had serious concerns about the plan.

The proposed increase in import
duty for gasoline and diesel fuel is expected to take effect 1 July. The duty
increase was proposed to take effect only in Grand Cayman and Little Cayman.
Mr. Bush said Cayman Brac would be spared the increase.

The new revenue measure, the only
major one proposed for the 2010/11 budget, was expected to raise $10.2 million
within the next year.

Mr. Bush said all legislators would
take a 3.2 per cent cut in pay, except for himself and opposition leader
Tibbetts, who would take a 10 per cent salary reduction.

Government’s operating deficit was
anticipated to be at $45 million by 30 June, less than the $57 million gap
forecast in February. Meanwhile, government expected to end the year with $77
million in the bank.

Despite the salary reductions and
new import tariffs to be implemented next year, Mr. Bush said government still
expected to end the next budget on 30 June, 2011 with a $31.8 million deficit.

The premier said government had
promised the United Kingdom’s Foreign and Commonwealth Office that it would
work over the next three years to gradually reduce spending deficits and lower
its public project debts.

In return, the UK has allowed
Cayman to borrow further to support operations over the next year. However,
foreign minister Henry Bellingham made it clear in a letter to Mr. Bush that
this was all the UK intended to let Cayman borrow through 30 June, 2011.

The UK has required that Cayman
create a ‘sinking fund’ – also known as a rainy day fund – with the proceeds
from sales or divestment of government assets. Those funds could be used to pay
off debt or to increase Cayman’s available cash.

Britain also required that its
overseas territory complete audited accounts for all of its government entities
by the end of the next fiscal year – 30 June, 2011.

Expenditures in the upcoming budget
included $507.7 million for core government operations. Mr. Bush said he had
shaved off $68 million from the budget that the civil service had first
proposed in March.

Another $32.8 million would be paid
for debt service, and some $1.5 million was set aside for anticipated losses
from statutory authorities and government companies.

Cayman’s government still plans
significant spending on capital projects during the next fiscal year, including
nearly $109 million for new high schools and the completion of the government
office accommodation project.

The borrowing needed to get Cayman
through the year is expected to bring its public debt figure to $623.7 million
by 30 June, 2011.

“This is not where I want to be,”
Mr. Bush said. “We will take steps to correct this dangerous situation.” 

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