Government needs budget supplement

A meeting of the Legislative Assembly’s Finance Committee is expected to be called before the end of the current government budget year to deal with some supplemental funding requests.

Some of the cash is being sought for spending items that were unplanned when the year started; others are required to deal with increases in government spending for some already budgeted areas, the Caymanian Compass has learned.

“The Cabinet is currently considering an agenda of items to bring to the Finance Committee of the Legislative Assembly for their consideration of supplementary funding in the current 2011/12 financial year,” said Michael Nixon, senior assistant financial secretary.

Mr. Nixon said he was unable to comment further because the precise agenda and date for the meeting had not been set as of press time.

One example of a budget increase that government will have to support via supplemental funding is the $4.6 million boost given to the Royal Cayman Islands Police Service earlier in the year. That extra spending was approved amid a major public outcry over a string of gang shootings that occurred in September 2011.

Supplemental budgets are fairly common during government budget years and are used when adjustments are needed to make ends meet.

Premier McKeeva Bush had warned of a government financial fall off during the current 2011/12 year.

According to Mr. Bush, who is also the country’s finance minister, a $4.5 million anticipated operating deficit by 30 June, 2012, is largely due to a $21 million increase in government spending and projections that a modest increase in public sector revenues over the same period just won’t be able to match the expenditures.

These figures were released by the premier in early December. At that time, Cayman’s central government revenues for the 2011/12 fiscal year will rise to $548 million, while expenses will increase to $511 million. When an additional $41.8 million to pay off public sector debt and cover the losses of statutory authorities and government-owned companies is factored in, the operating deficit of $4.5 million is reached.

The Cayman Islands government ended the previous fiscal year – 2010/11 – with a $25 million operating surplus, which means revenues were higher than expenses. This year, the government had hoped to end with a modest $3.8 million surplus, but revised figures from the policy statement send that figure more than $8 million in the other direction.

Premier Bush has also said that government does not intend to borrow any more money until June 2016. He has urged all public sector agencies to curtail spending increases to a “bare minimum” during the next three years

“We can no longer afford to do business as usual,” Mr. Bush told lawmakers in December.

Pay rise

The Cayman Islands government in December reinstated a 3.2 per cent cost of living allowance it deducted from civil servants’ salaries in July 2010.

Premier Bush said in late August 2010 that a modest pay raise for government workers was possible since Cayman ended the 2010/11 budget year with a $25 million operating surplus.

Commenting on the reinstated allowance, Mr. Bush said: “If you recall, when we were considering reducing salaries, I offered a 15 per cent salary reduction of the highest paid civil service posts all around and 5 per cent at the low end. No one agreed with that. What was offered was the 3.2 per cent, so I had to go along with that, but I have always said that any reduction in civil servants’ salaries is money taken out of the Cayman economy and I said that when it was possible, the 3.2 per cent would be reinstated.

“Times are difficult for everyone and civil servants are no different than other people. I’m happy it is possible to reinstate the 3.2 per cent. This was something we had to take from them because the last government made such a mess of public finances. We must still be prudent and watch our expenditure. I believe that God will help us through these difficult times.”

NRA owed $2.5M

The Cayman Islands government owes the National Roads Authority some $2.5 million for projects the authority has executed, including $1.2 million due from the Ministry of District Administration, Works, Lands and Agriculture and $1.3 million from the Road Fund, according to documents provided by the authority in response to a Freedom of Information request.

Of the $2.5 million, nearly $240,000 has been due for more than four months and falls under the past fiscal year, which ended 30 June, 2011. The authority has been told the government does not have the resources to pay the $240,000 for those projects.

“The ministry has indicated that the appropriations for these two items were exhausted in fiscal 2010/11 and thus there are no funds to pay the amounts due,” according to the authority’s response. “The NRA believes these amounts are rightfully owed and that an appropriation should be made to pay the amounts.”