Lawmakers approve $549M spending plan

Budget debate focused more on local hiring

Disputes over why Caymanians weren’t hired for various government jobs dominated a two-week debate over the government’s $549 million spending plan for 2013/14, which has been formally approved by the Legislative Assembly. The budget passed unanimously Wednesday afternoon.  

The Cayman Islands government expects to end its budget year in June with a $100.3 million operating surplus by adding only one new tax and without major cuts to essential programs and services, Finance Minister Marco Archer has said. 

Projections are for government’s core operating revenues to top $644.6 million, while expenditures will fall just below $549.3 million for the year ending June 30, 2014. The expenses include $25.3 million paid to non-government entities and $33.2 million in interest payments on government’s debt.  

Revenues in 2013/14 are estimated to be about 4 percent higher than in the previous year, while expenditures are expected to be about $8 million less.  

Much of the $100 million operating surplus is already earmarked for certain government expenses at the end of the year. Principal debt repayment, which is the amount aside from accumulated interest that the government is paying on its loans, will cost $26.3 million this fiscal year. Capital costs, including a $24.6 million payout to statutory authorities and government-owned companies, total $51.9 million for the year.  

If both of those amounts are paid out of the operating surplus at those budgeted levels, the surplus will eventually be reduced to about $22 million by the time the budget year ends on June 30, 2014.  

Total core government debts were expected to fall just below $549 million by June 30, 2014.  

The one new tax measure proposed during the 2013/14 is a licensing and registration fee for hedge fund directors whose investment funds are registered in the Cayman Islands. Mr. Archer said that revenue stream was delayed during the last government budget to allow “for proper consultation with the financial services industry.”  

Civil service  

The 2013/14 budget plan, which accounts for all expenditures by government since July 1, 2013, also calls for a reduction in overall civil service personnel costs by $1.2 million to $237.6 million compared to the last budget. That also includes an $11.4 million payment into the government’s past service pension liabilities, due to keep the current retiree payment system solvent.  

The supplies budget for the year increased slightly to nearly $91 million to account for costs such as $3.4 million to operate Clifton Hunter High School for a full year, as well as additions to several local primary schools. Also, an upgrade to the government’s IRIS computer management system is expected to cost around $700,000.  

An additional $25.2 million will go to non-government entity costs. For example, some $14 million was budgeted for health care costs at overseas institutions (last year, government spent more than $18 million); $2.5 million in legal aid payments; $1.6 million for rental assistance in social service programs; $1.5 million toward the Cayman Islands Private School Association; and $1.4 million for The Pines retirement home.  

About $33 million is for “transfer payments,” an increase of $1.5 million over last year. This covers costs of such items as $13.6 million for scholarship programs, $7.6 million for poor relief payments and $6.7 million in benefits paid to seamen and veterans.  

Nearly $52 million is budgeted for capital [construction] costs, including road improvements, land purchases, building repairs and government vehicle purchases.  

One area where government plans to cut costs is in statutory authorities and government-owned companies. These entities operate under appointed boards and, to some degree, are independent of the central government.  

In the last budget year, government spent $110.8 million in subsidies for these authorities, which include the Cayman Turtle Farm, Cayman Airways, the port authority and the airports authority.  

This year, Mr. Archer said, government expects to spend $100.7 million on these subsidies “by introducing a number of innovative measures.”  

 

Local jobs  

Over the past week, lawmakers have argued with civil service chiefs about the hiring practices of various public sector entities.  

Legislators raised several issues, including cases where one department seemed to ignore job advertising requirements and another failed to hire a Caymanian for the permanent job, even though that person was the only successful applicant.  

Questions were also raised about the appointment of a new managing director for the Information and Communications Technology Authority to succeed retiring authority director David Archbold. Planning Minister Kurt Tibbetts, who is responsible for the authority, promised to investigate the matter.  

The debate over Caymanian hiring ended in a spat between Deputy Governor Franz Manderson and Opposition Leader McKeeva Bush, after Mr. Bush tried to move a motion that would have tied funding for the Customs Department to a requirement that government hire a local candidate as head of the agency.  

“That motion infringes on the governor’s and my responsibility for the civil service in that we are now putting MLAs in a situation where they are now dictating the requirements, or dictating to me, who I should employ, and that cannot be right,” Mr. Manderson said.  

“The deputy governor might feel this is some sort of dictation to him, he can take it any way he pleases,” Mr. Bush said. “I have responsibility to vote funds as I see it, or not vote funds. This is not infringing on any constitutional right, or the governor’s, nor of the deputy governor’s. I’m not telling him who to hire, but I can tell you this, what I do know is what I see them doing is wrong. They’re fixing it for someone they don’t want and it’s gone on for far too long.”  

The motion failed, and funding for the Customs Department passed the committee.  

 

Police staffing 

Proposals to increase the Royal Cayman Islands Police Service budget were rejected by government.  

North Side MLA Ezzard Miller sought support from the government bench for a motion that would increase the line item for police protection and investigative services by $1.29 million. In return for this increase, Mr. Miller proposed that 12 police officers be hired – six for Bodden Town district, three for North Side and three for East End. 

“I don’t want to be involved in policing, I just want some police,” Mr. Miller said. 

The RCIPS eastern districts commander, Chief Inspector Brad Ebanks, said recently that his daily staffing levels at the Bodden Town police station equated to five officers per shift. 

Mr. Archer pointed out that the government had no authority to simply increase its overall budget for the year. 

“We would be in breach of the medium-term fiscal strategy as approved by the [U.K.] Foreign and Commonwealth Office,” Mr. Archer said. 

Premier Alden McLaughlin said his government is working on a long-term strategy for crime and policing that could be put astray by snap decision-making. 

“We cannot go about dealing with a major national problem by taking off-the-cuff decisions in finance committee,” the premier said. “It needs much greater consideration.” 

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