The interim budget, Mr. Bush said, would provide lawmakers some additional time to make further cuts in the government spending plan which – at one point – was more than $130 million over what government ministers had initially proposed.
“We cannot allow our expenditures to rise as they have in the past,” Mr. Bush said. “We must cut the expenditure, because the last government put us in this intolerant situation. We must reduce expenditure if we are ever going to control our finances again.”
Mr. Bush said he initially set budget targets in January of $498 million in operating expenditure and $59 million in capital [construction] work.
The initially proposed operational expenses, which were overshot by $130 million, were cut to $549 million total – still about $50 million above what was first proposed. In addition, Mr. Bush proposed borrowings of $59 million and an increased ‘overdraft facility’ – which would allow the government to borrow to cover expenses if it came up short at the end of the year again.
The United Kingdom’s Foreign and Commonwealth Office rejected that spending plan, stating the proposed expenditure was “unsustainable”.
“They require further reductions to operating costs,” Mr. Bush said. “This will take us time to achieve.”
The interim budget, which Mr. Bush said would be brought to the Legislative Assembly on Wednesday following Governor Duncan Taylor’s Throne Speech, will secure financing only through the end of September at the latest. After that, Mr. Bush said the additional spending cuts had to be agreed.
“Such decisions must be made in a careful and measured way,” he said.
A communication sent to Cayman Islands lawmakers late Friday afternoon confirmed that the government’s State Opening and Budget Address would occur on Wednesday, 27 June.
Governor Duncan Taylor also issued a proclamation Friday indicating that the new session of the Legislative Assembly would be held Wednesday.
The dates leave lawmakers just four days before the end of the current fiscal year, so the interim spending plan would have to be approved in that time.
Mr. Bush had told the Caymanian Compass Tuesday that he hoped to have a budget ready to present to the assembly by this Friday, but he acknowledged that his was not the last word on the matter.
The United Kingdom’s Foreign and Commonwealth Office must approve government’s spending plan for the 2012/13 year, which begins on 1 July, before the Legislative Assembly does. In simple terms, the UK approval is required because of concerns about Cayman’s cash reserves and the country’s debt-to-revenue ratios which do not meet requirements in the overseas territory’s Public Management and Finance Law.
Mr. Bush acknowledged Tuesday that Overseas Territories Minister Henry Bellingham “didn’t like the borrowing” the premier had proposed in the 2012/13 spending plan. About $40 million had been earmarked for various projects including completion of the government high schools on Grand Cayman, the building of a juvenile prisoner remand centre and the provision of solar panels for low income households, Mr. Bush said.
Furious behind the scenes preparations within the civil service were going on all week with meetings continuing late into the night in attempts to reduce government spending to acceptable levels, the Caymanian Compass has learned.
On Tuesday, Financial Secretary Ken Jefferson sent out an email to chief officers which indicated the government required further cuts including the reduction of equipment and supply budgets by more than 10 per cent and the elimination of most vacant positions existing within the service ahead of the 2012/13 year.
Opposition Leader Alden McLaughlin said Thursday that he was aware further requests for budget reductions from certain departments had been made, but he was not able to specify what those included.