Third ‘temporary’ budget in five years

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This month’s election will require the Cayman Islands government to proceed with its third “temporary” or interim spending plan within the past five public budget cycles.  

Since 2004’s Hurricane Ivan, when the general election was shifted from November to May, it has been customary practice during an election year to give the incoming government a reasonable period of time to sort things out. Cayman’s budget year now runs from 1 July of one year to 30 June of the next and, generally, the five-week period between the election and the new budget year isn’t enough time.  

Financial Secretary Ken Jefferson said the incoming government has to first determine how its ministries and portfolios will be arranged and work with the deputy governor to determine who will be assigned to lead those entities.  

“While the incoming government is occupied with getting itself ‘bedded-in’, before the new fiscal year starts on 1 July, 2013, the minister of finance will take a temporary budget to the Legislative Assembly for its approval of up to four months of expenditure,” Mr. Jefferson said. “It is not possible for an incoming government to effectively come into office in June 2013, present a 12-month budget for approval by the LA and get this approved before 1 July.”  

After 31 October, a budget for the rest of the year must be reviewed and approved by the assembly. Any expenditures made during the first four months will be subsumed by the full 12-month budget when it is approved later in the year.  

Cayman is quite familiar with the temporary budgeting process, having just gone through one last summer in a non-election year. The current 2012/13 spending plan was actually approved in August after a two-month budget was approved as a stop-gap measure by the assembly.  

Also, the government approved a four-month temporary budget for the 2009/10 year following the May 2009 general election. The budgets for the 2010/11 and 2011/12 years were approved just prior to 30 June.  

According to the most recent estimates, lawmakers will have some financial “cushion” to work with following the 22 May voting, but not quite as much as first forecast.  

The Cayman Islands government is expected to fall $31 million short of its projected operating surplus in the current 2012/13 budget, according to a report issued late Wednesday.  

That drop from a budgeted surplus of $82.3 million to a now-projected surplus of $51.1 million is entirely due to a decrease in expected revenues for the year.  

The government’s “Pre-Election Economic and Financial Update” lists several areas where government revenues came in lower than anticipated. They include: $11.3 million less than budgeted due to continued delays in the construction of the Special Economic Zone. Another $2.6 million did not come in due to project delays affecting the implementation of the Special Economic Zone grant fee, $2.2 million less than budgeted due to legislative delays and “other timing issues” from a tourism departure tax, $5.1 million less than budgeted from work permit fees partially due to delayed implementation of fee increases, and $2.6 million less than budgeted partially due to “timing and delayed implementation of revised fees” for new fees on motor vehicles in the islands.  

Other government revenue measures were not implemented at all during the 2012/13 year and will be implemented for the next budget. Those measures were expected to raise an additional $33 million for government coffers.  

The Cayman Islands central government service has managed to cut $600,000 from its operating costs, according to projections through to the end of the budget year on 30 June.  

According to estimates in the pre-budget financial report, government has slashed personnel costs from the original budget by nearly $7.5 million due to “attrition and recruitment reasons”. The personnel budget for the 2012/13 is still more than $10 million higher than it was the year before. 

Supplies and consumables costs were cut by an estimated $5.1 million mostly because of reduced professional fees, such as marketing and maintenance.  

However, those projected cost cuts were balanced out by higher healthcare costs. “Increased utilisation” of the Health Services Authority will cost an extra $4.2 million, while cost of providing medical care at overseas institutions went up $8.1 million from the original budget.  

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3 COMMENTS

  1. Caymanians are learning what happens when they give important jobs to incompetent (but honorable for life) fools. I hope someday their kids will see what happens when they hire competent and incorruptible over family. Or at least what happens when the UK takes over and does it right. I’m not sure there will be anything left that anyone will want to work with.

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  2. When planning any budget you must expect the worst and budget for it. This is the basic problem all financial failures face, over optimistic projections.
    Frugal people operate with a different mindset and allways realize that tomorrow everything could be messed up.
    let me point this out to you all. Smart people build as their homes in piece meal. They buy the land , pay for it, buy the block pay for it, buy the steel and pay for it. This is because life is hard and you don’t know what tomorrow could bring.
    Dumb people go to the bank,the bank like a casino will always win over time.
    Perhaps the next leaders will have this kind of mentality. Look at whom you will vote for, is there home paid for? Do they live in debt? Have they been successful in life and business?
    My father always told me don’t go to a man that has been divorced 3 times for marriage advice unless you want a divorce.

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