During the upcoming session of the Legislative Assembly, Cayman’s opposition leader will propose using some of an expected $100 million-plus government surplus to help reduce electricity bills for residential customers.
The assembly is expected to convene next week to review the budget for the 2014/15 fiscal year, but it is unlikely Opposition Leader McKeeva Bush’s motion will be heard before the government spending plan is approved.
According to the private members motion, to be seconded by West Bay MLA Bernie Bush, government is being asked to reduce import duty “to where it brings down the cost to the consumer in a meaningful manner.” It is also being asked to restart a temporary employment program for local workers.
Mr. Bush said this week that he specifically seeks to have government reduce import duty on fuel. The former United Democratic Party administration increased the duty by 25 cents per gallon in 2010.
“We had to put on the duty because we never had any money,” Mr. Bush said of the former government that he led as premier. “We promised, as soon as we had a sustainable flow of revenue and we had a sustainable surplus, we would reduce the duty.”
The largest payer of fuel import duty in the Cayman Islands is Caribbean Utilities Company, which uses diesel fuel to power its electricity generation plants. Mr. Bush surmises that reducing the costs of importing fuel for CUC would translate to a rate reduction for the consumer.
However, the opposition leader noted that the reduction must be significant enough to encourage a real reduction for utility customers.
“Reducing $6 million or $7 million [on CUC’s import bill] would only [save] about $20 per household,” Mr. Bush said. “This is negligible.”
The exact amount of government’s operating surplus – revenues exceeding expenditures in the current budget year – was not known at press time. Finance Minister Marco Archer has said he expects a $100.3 million surplus by June 30. However, Premier Alden McLaughlin hinted Friday that the surplus would be higher than expected, and Mr. Bush said he’d heard a figure of $104 million mentioned, but that was not confirmed by the government.
In any case, the operating surplus – while significant – will be reduced by the costs of paying off the principal on government debts and by spending on public projects. A Cayman Compass analysis of the 2013/14 budget showed that the $100.3 million surplus would be reduced to $22 million by the time debt payments and capital project costs were taken out.
Mr. Bush’s motion also seeks the revitalization of a seasonal work program implemented during the former UDP administration. This program, which involved hiring people on a temporary basis to clean up roadsides and beaches, cost the government about $1 million annually.
The opposition leader suggested that the program could be expanded to include painting and repairing buildings, basically improving the island’s look while giving out-of-work individuals some temporary assistance.
“It’s always good that we have a surplus, but you can’t save up a surplus and leave your people without electricity and without work,” Mr. Bush said.
While Cayman is likely to find itself in a good position with regard to operating revenues, the government’s overall debt remains a worry for both the ruling Progressives government and U.K. budget overseers.
Core government debt was expected to fall just below $549 million by June 30, including a $26.3 million principal payment made over the course of the current budget. Total public sector debt, including money owed by government-owned companies and statutory authorities, will total around $678 million at the end of the current budget year.
It is partly because the Cayman Islands government is spending so much money during the 2013/14 budget year to pay off its debts that Cayman finds itself, once again, not in keeping with the principles of financial management under its Public Management and Finance Law. Combining both interest and principal on various government debts, government will pay 12.2 percent of its projected core revenues for the year – or more than $78 million in a single year.
The debt service to core government revenue ratio required under the law is supposed to be no more than 10 percent each year.